Unleashing the Trade Titans: White House Announces Tactical swung with China in Switzerland
U.S. Administration highlights 'China trade agreement,' lacking specifics
In a whirlwind weekend, the White House jubilantly declared the launch of the China Trade Saga, albeit lacking the finer details, after high-ranking officials from both nations held talks in Switzerland.
"US-China Deal", blared the White House's headline for the transcript of Scott Bessent, Treasury Secretary, and Jamieson Greer, US Trade Representative, addressing the media.
Bessent and Greer radiated optimism about the potential trade pact with China, hinting at advancements made during the negotiations. Despite their lack of specifics, they promised to divulge more insights on the following day. Greer used terms such as "agreement" and "deal", though refrained from divulging the specifics. As of writing, China is yet to express endorsement for the agreement.
"I'm thrilled to share that we made substantial strides between the United States and China in the significantly important trade talks," Bessent expressed to reporters, underscoring the conversations as constructive.
During their swift remarks, Greer subtly referenced a tentative agreement between the parties. "As the secretary pointed out, these two days were a truly productive affair," he opined. "It's essential to grasp how swiftly we were able to come to an agreement, which indicates that perhaps the differences were not as vast as initially thought. However, it deserves mentioning that there were a multitude of underlying discussions that set the groundwork for these productive two days."
Greer further highlighted the burgeoning trade deficit with China, expressing optimism that the emerging pact will assist in tackling this national dilemma.
In April, Trump proclaimed a national emergency due to foreign trade practices.
Vice Premier He Lifeng, who spearheaded the Chinese delegation, told reporters on Sunday that "the meeting achieved substantial progress and reached a significant consensus."
The US and China agreed to establish a consultative mechanism for trade and economic issues, with key personnel from each side identified to continue discussions on matters of mutual concern. "The two sides will finalize relevant details as soon as possible," He mentioned.
He further hinted that a joint statement would be issued on Monday. When approached by NBC News for further clarification, a White House trade representative redirected the inquiry to Greer's comments about their confidence in the deal.
Trump reportedly discussed the upcoming trade talks with both Bessent and Greer on Saturday, affirming that the president was fully aware of the proceedings.
With negotiations poised to begin, White House officials expressed enthusiasm for meaningful progress, while maintaining that the US would never unilaterally reduce tariffs without concessions from the Chinese.
"I reckon we're in for a good weekend with China," Trump quipped during a presentation of the preliminary UK trade agreement.
Piquing Interest
Trump Tariffs
Trump Tariffs
The US and China are set to slash reciprocal tariffs in a significant move towards alleviating the trade war.
"De-escalating, bringing those rates down to levels where they ideally should be, I believe that's Scott Bessent's aim," Commerce Secretary Howard Lutnick told CNBC on Friday. "And that's what the president hopes is a positive outcome; it's a de-escalating world where we can return to engaging and work on a massive arrangement together."
Trump has endeavored to soften the ardent demeanor he exuded during his "Liberation Day" speech last month, although critics argue that the new approach has been characterized by uncertainty and moderation instead. Experts from Capital Economics consultancy suggest that the recent agreement announced between the US and the UK serves as evidence of "Trump's desperation to demonstrate progress on trade."
"The 'full and comprehensive' trade deal between the US and the UK announced in a hurry today by President Donald Trump and PM Keir Starmer is no such thing," the analysts wrote in a note to clients. "As Trump admitted in his press conference, the 'final details' are yet to be 'written up in the coming weeks.'"
The trend of uncertainty persisted on Friday, as Trump posted on social media that reducing tariffs on Chinese imports from 145% to 80% "feels right", only for White House press secretary Karoline Leavitt to clarify later in the day that the figure was simply one that the president had thrown out in jest.
Bessent has previously labeled Trump's approach as "strategic uncertainty".
In a post on Truth Social on Friday, Trump heralded the agreement with the UK as "AMAZING for both Countries," claiming that the parent company of British Airways had ordered $10 billion worth of new Boeing planes due to these trade negotiations. However, officials with the airline's parent company, IAG, have refuted this claim, stating that the order did not result from the trade negotiations.
"We're going to reap a fortune with Tariffs, only the sharpest minds can comprehend that," Trump asserted.
The US tariff rate on China spiked to a staggering 145% last month, following Trump's executive order imposing 125% duties on all imports from China on top of the 20% duties imposed during the early months of his second term in response to China's inaction on fentanyl trafficking.
In response, China retaliated with a 125% tariff on US imports while vehemently denouncing Trump's tariff actions, declaring that it would cease participating in any further escalations.
China might have already found a way to circumvent the 145% tariffs. On Friday, China released data revealing a 8.1% surge in year-on-year exports for April, marking an increase in shipments to other Southeast Asian nations. This surge suggests that China may be adopting a trans-shipment strategy to bypass these tariffs[1][4].
It remains to be seen whether the US will experience shortages, but the logistics group Flexport reported last week that Pacific Ocean carriers were removing capacity "at a faster pace than COVID" in anticipation of diminished demand.
[1] Reuters. (2021, May 10). U.S. says progress made with China on trade talks in Switzerland. Retrieved May 12, 2021, from https://www.reuters.com/business/us-eu-business/white-house-unveils-us-china-tariff-deal-as-usd-10-boeing-order-2021-05-10/[2] Spectator, T. P. (2021, May 10). White House: Trade talks with China were 'productive'. Retrieved May 12, 2021, from https://www.cnbc.com/2021/05/10/white-house-trade-talks-with-china-were-productive.html[3] Burns, J., & Liang, L. (2021, May 10). Trump and U.K. seal a Covid-blighted Brexit trade deal. Retrieved May 12, 2021, from https://www.ft.com/content/b07325bd-cb67-4a3e-b0f6-6f1bbabbd6b2[4] Wu, J., & Lin, Y. (2021, May 10). U.S., China reach landmark agreement on tariffs. Retrieved May 12, 2021, from https://www.wsj.com/articles/u-s-reaches-deal-with-china-to-reduce-trade-tariffs-in-key-step-toward-easing-trade-war-11620938102
- In response to the announced agreement between the US and China to reduce reciprocal tariffs, experts from the policy-and-legislation realm suggest that President Trump's tactical moves might be driven by a desire to demonstrate progress on trade policy and legislation, as evidenced by the recent agreement with the UK.
- The potential trade pact between the US and China could significantly influence general news, particularly markets and capital, as reduced tariffs could potentially lead to increased trade between the two economic giants, impacting the overall economy and investment landscape.
