US Treasury Secretary Scott Bessent (r) and US Trade Representative Jamieson Greer in a news conference in Geneva, after US and China talks (photo: AFP)
Following weeks of mounting tension between the US and China, the Trump administration has decided to reassess the tariffs it had imposed on China. On 9 May, Trump announced that he might slash them by nearly a half – from 145 to 80 per cent. Then, on 11 May, bilateral negotiations took place in Switzerland. Trump described the talks as “friendly, but constructive.” He posted on Truth Social: “A very good meeting today with China, in Switzerland. Many things discussed, much agreed to… GREAT PROGRESS MADE!!!”
As the US changed its tune about China, especially its rhetoric of unfair trade practices and intellectual property theft, Beijing reiterated its readiness for diplomatic solutions to address the “retaliatory tariffs” the Trump administration had initiated. Both sides are eager to cool the temperature of their contact, not least because of the turmoil in global financial markets caused by their ongoing trade dispute and mounting fears of the spectre of a global economic recession. The US’ impetuous weaponisation of tariffs has severely shaken the global economic system, disrupting international markets.
Both countries are conscious of the huge volume of their bilateral trade, amounting to around $600 billion annually. So it is perhaps little wonder that the Chinese Ministry of Commerce’s declaration of “openness to dialogue and consultation” was met with Trump’s description of Chinese President Xi Jingping as “a smart man.” Yet, while Trump added that “China also wants to make a deal, badly, but they don’t know how to get it,” it looked like Washington was greeting the détente with equal relief.
The US has seen a spike in inflation rates and a turndown in economic growth since the Trump administration’s blanket tariff hikes. According to estimates by Goldman Sachs, about 36 per cent of US imports from China are difficult to replace with alternative suppliers. This means that Washington’s ability to reduce its dependence on China’s production is limited, at least for the short to middle term. In contrast, China is far less dependent on goods from the US, which constitutes only 10 per cent of its imports. Beijing therefore feels no pressure to make hasty concessions or buckle to Trump’s demands. Moreover, China has accelerated its drive to boost local manufacturing and supply chains and further reduce its reliance on imports from the US, especially in crucial technological components. It has simultaneously increased investments in domestic innovation in the tech and clean energy sectors.
Trump’s tariff policies have rebounded on US consumers, especially for intermediate and consumer goods such as electronics, machinery, clothing and furniture. With no reasonably priced alternatives to turn to, consumers are forced to swallow the tariff hikes, contributing to inflationary pressures and lower per capita purchasing power. This has directly affected Trump’s popularity, as protests against his economic policies all across the US in April tangibly manifested.
The US’ global image has also been hit hard by Trump’s policies, especially in relation to China. Seizing on the international fallout from the tariff hikes, Beijing has successfully presented itself as the more rational and friendlier trade and investment partner, especially with countries of the Global South.
With regard to the Middle East, the US’ image has sharply deteriorated as a result of its extreme pro-Israeli bias and continued complicity in the genocide of Palestinians in Gaza and the West Bank. Along with Washington’s apparent indifference to Israeli incursions into Syria, the Trump administration’s insistence on using military force against Yemen to address tensions in the Red Sea instead of addressing the root cause of those tensions – Israel’s war on Gaza – have further undermined the US’ standing in the region, including among its staunchest allies. Those factors, too, have contributed to Beijing shining.
Although there are many compelling reasons for the US and China to overcome their differences and put the current standoff behind them, a resolution may not be as swift or as easy as either side might wish. First, Beijing still appears adamant on the US lifting its tariffs entirely or at least bringing them in line with global trading norms. In a press briefing on 9 May, for example, Chinese Ministry of Commerce spokesperson He Yadong said, “the US side should make preparations and take actions on issues such as correcting its wrong practices and lifting the unilateral tariffs.” Reiterating his government’s commitment to upholding international economic and trade rules and the principles of fairness and justice, he added, “we hope the US side will work with China in the same direction and address the concerns of both sides through equal consultation.”
Secondly, many are concerned that Trump’s mercurial nature may lead him to backtrack on his decision to reassess his tariffs. Such scepticism is reflected in Beijing’s emphasis on the need to back words and promises with practical steps that build mutual trust.
Thirdly, some analysts have suggested that China may want to prolong the trade war with Washington. Despite the impact of this war on its economy, Beijing has also reaped direct and indirect gains, whether in terms of stimulating investment in domestic manufacturing and technology development and innovation or in terms of its rising star as a global political and economic leader.
While it is too early to make predictions, the international community strongly welcomes the prospect of a de-escalation. The hope now is that the two sides will show sufficient flexibility and resolve to find solutions rather than allowing intransigence to escalate into a fully-fledged trade war with potentially dire consequences for the global order.
* A version of this article appears in print in the 15 May, 2025 edition of Al-Ahram Weekly
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