On this particular issue, a bright spot in recent news is the revival of talks for a possible tariff settlement between the U.S. and China. Today, President Donald Trump announced that his administration is still negotiating with China to reduce trade hostilities. This announcement came on the heels of a phone call between President Trump and Chinese President Xi Jinping that may have signaled an early thaw in US-China relations. Yet, China has been walking on eggshells here, as officials have compared making concessions in return for Trump’s tariffs as “drinking poison.”
Moreover, both nations find themselves at a unique turning point. As former chief economist of the Federal Reserve Board, Scott Bessent, put it, they need to at least de-escalate the current spike in tariffs — now 145% for the US and 125% for China. He underscored the need to view a potential trade agreement as a multi-step endeavor, illustrating the complexity of the international deal-making process.
Tariff Talks and Economic Pressures
At a White House press briefing on June 1, President Trump expressed his hopefulness regarding the negotiations. In addition, he declared that the odds for a deal with China are “very good.” This sentiment is echoed against a backdrop of growing concern about economic effects as we head toward the holiday shopping season. Bessent warned that if orders are not placed in the near term, we risk creating further terrible disruptions for Chinese producers.
“They sell us about five times more than we sell them. So their factories are closing down as we speak.” – Scott Bessent
While US officials have been extremely optimistic about this announcement, Chinese reactions thus far have been tempered. Beijing has staunchly rejected that claim and has downplayed the prospect of any formal negotiations. Guo Jiakun, another ministry spokesperson, claimed that the two countries have not conducted any consultations or negotiations on tariffs. In particular, he stressed that China has no incentive to rush to the negotiating table.
“As far as I know, there have been no consultations or negotiations between China and the US on tariffs.” – Guo Jiakun
Beijing’s unwillingness to back down in the face of exhortation is most clearly seen in its response to the ongoing crisis. The Chinese government has consistently but quietly drawn up a list of US-made products that it would exempt itself from retaliatory tariffs on. This savvy maneuver is designed to preserve a slate of economic engagement without ever looking like they are bowing down.
The Path Ahead and Strategic Considerations
Even as each side asserts their optimistic approach to bargaining, the game is still afoot. In his closing comments, Bessent emphasized the intense pressure that China is under. Yet its reliance on exports to the US is not only substantially more than vice versa. This economic imbalance could be a key factor determining how Beijing decides to engage in future trade negotiations.
“We’re going into the holiday season. Orders are placed for that now. So if those orders aren’t placed, it could be devastating for the Chinese.” – Scott Bessent
Guo Jiakun underscored that moving forward dialogue should always be based on equality and mutuality in benefit. This remark highlights China’s preference for talks that do not threaten its prestige or dignity, or have the look of surrender.
“dialogue and negotiation must be based on equality, respect and mutual benefit.” – Guo Jiakun
Both countries are in the midst of recalibrating their approaches. The resulting narrative, wrote international relations expert Xin Sun, leaves the US looking much more willing to compromise. Simultaneously, it promotes the idea that China is open for dialogue. Such tactical vagueness might further both nations’ short term political aims by coloring public perception in their favor.
“On one hand, it portrays the United States as more eager to negotiate with China than vice-versa. On the other hand, it subtly signals China’s openness to talks.” – Xin Sun
Historical Context and Future Implications
These talks are based on the “Phase 1” trade agreement signed in 2020. This deal obligated China to increase its imports of American products by $200 billion over the next two years. Yet the arrival of the COVID-19 pandemic almost immediately after this MOA made things much more difficult and brought the effort to a grinding halt.
Yet, for all the history, acrimony, and unfulfilled agreements, Bessent believes that China still wants to come to a deal. He drove home the point that any change will definitely be slow and incremental, needing patience and long term thinking from both parties.
“I am confident that the Chinese will want to reach a deal. And as I said, this is going to be a multi-step process.” – Scott Bessent
