Sino US Trade War: Focus On Several Highlights Of Recent Tariff Negotiations In Geneva

The Trump 2.0 government has been fighting a trade war for more than 40 days since April 2, targeting China, the source of the largest trade deficit. The US side took the initiative to suspend the collection of equivalent tariffs from other countries for 90 days on the 10th, and only 10% of the benchmark tariffs were added; The high tariff of 145% will remain unchanged as punishment for China's reciprocal retaliation.

At 15:00 on May 12, Beijing time, the Ministry of Commerce of China and the White House of the United States released the Joint Statement of the Sino US Economic and Trade Talks in Geneva on their official website, which pressed the "pause button" for the trade war and let the world take a breather, but it was not enough to "cancel the button", nor did it rule out the resumption of the "acceleration button". There are the following ten highlights, which not only reflect the shrewdness and pragmatism of both sides, but also reflect the differences and concerns of both sides.

I Avoid taking the initiative in negotiation Both sides levy high tariffs on each other. In essence, it is a trade embargo, which impacts the global industrial chain supply chain at a heavy cost and is unsustainable. The two sides fought psychological warfare and cognitive warfare to maximize their own interests. The US side continues to convey the message of welcoming negotiations, ongoing dialogue and so on, indicating and implying that China takes the initiative; The Chinese side has constantly clarified that the "false news" and "pure confusion" released by the US side have repeatedly stressed that the premise and basis of negotiations are "equality, respect and mutual benefit"; Even in the Geneva talks last weekend, both sides claimed that the other side took the initiative more than once. Relatively speaking, the US side is more eager to negotiate and the Chinese side is more calm.

II The United States made greater concessions to the negotiation goal The Wall Street Journal reported last week, citing sources from senior White House officials, that the United States is considering significantly reducing tariffs on Chinese goods from 145% to about 50-65%; Trump posted on social media on the 9th that "it seems reasonable to impose 80% tariff on China." However, China refused to accept and make concessions, insisting on the US side to completely eliminate all unilateral tariff measures against China. Buyers and suppliers bite the bullet and bear half of the 10% tariff; Tariff of 20% has left many commodities without profit margin, which has a great impact; There is no substantial difference between the tariff of 50% and 145%, which is far beyond the cost of production and circulation and is generally unbearable. After the Geneva negotiations, the two sides cut tariffs by 115% in an equal and synchronous manner, far exceeding the expectations of the United States.

III Equality is highlighted in many negotiations From the point of view of the place of negotiation, the US side once hoped that China would come to Washington. The Chinese side believed that the US was unjustifiable and did not want the US to maintain its home court advantage and show weakness to the US side. It gave the outside world the impression that it would sign an alliance under the city like other countries, and finally chose Switzerland, a neutral third country, to negotiate. It was confirmed in the joint statement that in the future, China and the US (implied to take turns as the host) Or a third country agreed by both parties. The last round of economic and trade consultations was held in Washington from May 17 to 18, 2018. From the perspective of participating officials, according to the press release of Xinhua News Agency on May 16, 2018, the central bank governor and other responsible officials of eight ministries and commissions accompanied the concurrent Vice Premier Liu He to visit the United States, and China sent a working group to the United States a week in advance for "intensive consultations". In this round of Geneva talks, the number of Chinese officials participating in the talks has shrunk significantly, and no working group has been sent to the United States to make a front stop. From the content of the statement, the Joint Statement of the China US Economic and Trade Consultation issued in Washington on May 19, 2018 showed that China is more vulnerable, for example, "will take effective measures to substantially reduce the U.S. trade deficit in goods with China", "China will substantially increase its purchases of goods and services from the United States", and "will significantly increase U.S. agricultural products and energy exports". There is no relevant statement in this round of joint statement.

four Negotiation rhythm is rational and professional . It is too difficult, too long, and too many variables to reach the goal in one step. Both sides are rational and pragmatic enough, and they did not expect a negotiation to solve years of grievances and problems, but conducted professional and meticulous cutting. There are two stages: in the first stage, both sides cut tariffs significantly to give each other sincerity and confidence in the market and other countries; In the second stage, the complex package agreement will be renegotiated. The United States still has high tariffs on China, the negotiations on real weapons have not yet begun, and greater difficulties are still ahead. After the Geneva negotiations, the United States still imposed a 10% tariff on all Chinese imports in the first round on February 1 and the second round on March 3, respectively, and China's retaliation in the second round on February 4 and March 4 also remained in effect, that is, during the 90 day suspension period, the United States imposed a 30% tariff on all Chinese imports; China will impose an additional tariff of 25% on coal, liquefied natural gas, chicken, wheat, corn and cotton imported from the United States, 20% on crude oil, agricultural machinery, large displacement vehicles, pickups, sorghum, soybeans, pork, beef, aquatic products, fruits, vegetables and dairy products, and 10% on other American imports.

V The two sides demonstrated a sincere compromise. They are professional and smart enough. They will tacitly give the green light to exempt customs duties on goods with high dependence on their own country, which not only protects their own interests, but also shows sincerity to the other party. The difference is that the United States is high profile and China is low profile. The US has publicly exempted tariffs on mobile phones, computers and semiconductors, which are mainly made in China and are worth about 102 billion US dollars; China has quietly exempted tariffs on chips, medicines, chemicals, aviation equipment, etc., worth about 45 billion US dollars. If the negotiations do not go smoothly, the exemption list will become longer and longer, which is also a compromise and relaxation in disguise. In the Geneva statement, the two sides promised to take two measures before May 14. In essence, the Chinese side promised three measures, just to reflect formal fairness, to merge the two measures that are equivalent to the United States into one. The more one is to "suspend or cancel the non-tariff countermeasures against the United States from April 2, 2025", and officially recognize that the "non-tariff countermeasures (retaliation)" were implemented in April. One of the consequences of popular description is that Chinese audiences are expected to watch Hollywood blockbusters Mission Impossible 8 and Avatar 3 simultaneously with North America.

VI The difficulty of bundle negotiation increases sharply . Pure trade negotiations are easy to talk about. In business, China is also prepared. Like Trump's 1.0 trade war, China should purchase more agricultural products and energy to narrow the trade deficit. However, there is a greater probability that both sides will attach a series of issues, and weigh the gains and losses, advance and retreat of multiple issues, so as to achieve the new positioning of Trump 2.0 in China US relations. For example, the United States or additional fentanyl, rare earth and other issues, China or additional chips, Taiwan and other issues. If the fentanyl issue is basically solved, Trump's first and second rounds of levying 10% tariffs on China will not be tenable, and China will inevitably demand the cancellation; It is difficult for the US side to meet the demand, because the 10% benchmark tariff reserved by both sides is far from enough to solve the long-term trade deficit in goods between China and the US. On May 19, 2018, Liu He, the then Vice Premier of China and the Chinese leader of Sino US economy and trade, expressed optimism to the media after the negotiation with the United States, "the biggest result is that the two sides reach a consensus, do not fight a trade war, and stop imposing tariffs on each other"; On May 11, 2025, He Lifeng, the Chinese successor to the two positions, did not present the consensus to the media after the negotiation with the United States, but objectively described "substantial progress" and "the two sides agreed (resumed) to establish the Sino US economic and trade consultation mechanism".

VII Tolerance affects negotiation The GDP of China and the United States in the first quarter increased by 5.4% and 2% year on year and 1.2% and - 0.3% month on month respectively at comparable prices. These data are not comparable. In order to avoid the high tariffs of the United States, China's exports increased sharply in the first quarter, the trade surplus in goods expanded, and the United States' imports increased sharply, and the trade deficit in goods expanded, thus having a phased impact on its GDP. Toys, home furnishings and other goods on China's e-commerce platforms Temu and Shein have risen sharply, which has passed on tariff costs to American consumers, and more goods have stopped shipping. It is generally believed that the Chinese government has more power to intervene in the market than the U.S. government, and the Chinese people are more united in the face of huge pressure. China has suffered more losses than the United States, but its tolerance is stronger than the United States. If US stocks, US bonds and the US dollar continue to be violently unstable and inflation rises significantly, the anger of the American people will soon be vented to the Trump government.

VIII Opportunities for the Summit Trump's style is that the heads of state talk first, and then the ministers of both sides implement the details after setting the tone; The Chinese side has always been accustomed to having the subordinate negotiate first, and then the head of state make the decision and sign, even as the result of the visit. In September this year, the United Nations held the World Leaders Summit to commemorate the 80th anniversary of its founding. It is expected that Xi Jinping will visit the United Nations Headquarters in New York. If he visits the United States before or after this, it will be a major opportunity for the relaxation of Sino US relations, especially the relaxation of trade wars. Other countries have come to Washington to sign trade agreements. It is predicted that China will not accept it. The most likely signing place is either the UN headquarters or still in a neutral third country such as Switzerland.

IX International environmental pressure guidance The United States launched a tariff war against all trading partners, overturning the international order established by the victors led by the United States after World War II, seriously damaging the United States' credit and soft power, and even the allies were indignant. Because the United States has the first comprehensive national strength and obvious advantages over other countries, including China, most countries are full of complaints about the willful hegemony of the United States, but they dare not express publicly, let alone choose between China and the United States. Instead, they have to compromise with the United States based on their own interests. Only Brazil and other countries publicly support China. If the Sino US trade war continues to worsen, elephants fight and grass suffers, other countries and international organizations should speak more. China and the United States are under more moral pressure, more motivated to compromise and reach a final agreement, which is more conducive to maintaining the fragile international order.

X Comprehensive competition affects mutual trust On April 28, U.S. Treasury Secretary Vincent Besant said that the first step to ease the tariff dispute should be taken by China, and the United States has temporarily suspended trade negotiations with China; Wang Yi, the Chinese Foreign Minister, said that compromise and retreat would only allow the bully to advance further. On April 29, the Ministry of Foreign Affairs of China released a video entitled "Don't Kneel". The high-level leaders of both sides shouted from the air, pressing and dismantling each other, which showed the depth of the gap. The US side judges that only China poses a threat to its global hegemony, and the Chinese side judges that the Trump government is trying to deprive the Chinese people of their right to survival and development. Kneeling will not solve the problem. In addition to being insulted, it will also add a few stabs and die faster. Therefore, China's position is obviously stronger than the Trump 1.0 trade war. There is limited room for compromise and it is not easy to compromise. However, both sides can't stand the "hard decoupling" of economy and trade. They have to play the game by false means, constantly test the bottom line of the other side, move forward in contradiction, and not collapse in confrontation.