Donald Trump has floated the idea of cutting US trade tariffs against China to 80%, as key peace talks between the sides prepare to get underway.
The meeting, involving top officials from both nations in Switzerland, is seen as an opportunity to ease the most damaging element of the trade war in terms of the global economic outlook.
Writing on his Truth Social platform, hours after agreeing to an interim deal with the UK, the president said: “80% Tariff on China seems right! Up to Scott B [Bessent].”
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It means that the decision will lie with Scott Bessent – the US treasury secretary who will lead the US delegation at the talks in Geneva.
The outcome is eagerly awaited after several rounds of tariff hikes that currently amount to duties of 125% covering US imports to China and 145% on Chinese goods arriving in America.
Both levels amount to an effective trade embargo, given the severity of those numbers.
The announcement of talks in Switzerland this week has been welcomed across financial markets, with the dollar and global stocks rising on Friday in anticipation of a cooling in the trade hostilities between the world’s two largest economies.
Investors are not only concerned by higher, if not extortionate, prices but also the impact on supply.
The effects are being felt in both economies already.
Fears of a trade war effectively meant that the US economy contracted during the first three months of the year, while the US central bank has held off on interest rate cuts on the grounds that tariffs applied to imports by the Trump administration globally will lift inflation markedly.
Official data out of China is yet to show any obvious pain, but surveys suggest factory orders are tumbling.
The fact that China is suffering was borne out on Wednesday when the country’s central bank cut interest rates and reduced bank reserve requirements to help free up more funding for lending.
The authorities also agreed wider borrowing facilities to help manufacturers.
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It will be hoped that bolstering activity in the economy will help lift prices generally, as China continues to battle deflation.
Officially, China has signalled that it wants the US to make the first concession.
Its delegation in Geneva is led by vice premier He Lifeng – a figure within China who has gained an international reputation as an effective negotiator.
A commerce ministry spokesperson said of the prospects for a breakthrough when confirming the talks: “The Chinese side carefully evaluated the information from the US side and decided to agree to have contact with the US side after fully considering global expectations, Chinese interests and calls from US businesses and consumers.”
