WASHINGTON — President Donald Trump floated cutting tariffs on China from 145% to 80% on Friday ahead of a weekend meeting among top U.S. and Chinese trade officials as he looks to deescalate the trade war between the world's two largest economies.
Top U.S. officials are scheduled to meet with a high-level Chinese delegation in Switzerland in the first major talks between the nations since Trump sparked a trade war with stiff tariffs on imports.
"80% Tariff on China seems right! Up to Scott B," Trump wrote on social media Friday morning, referring to Scott Bessent, his Treasury chief, who has been a point person on trade. The Republican president also called on China to open its markets to the U.S., writing: "WOULD BE SO GOOD FOR THEM!!! CLOSED MARKETS DON’T WORK ANYMORE!!!"
Bessent and U.S. Trade Representative Jamieson Greer will meet Chinese Vice Premier He Lifeng in Geneva in the most-senior known conversations between the two countries in months, according to announcements this week by the Trump administration and the Chinese commerce ministry. It comes amid growing U.S. market worry over the impact of the tariffs on the prices and supply of consumer goods.
So far, the Chinese have refused to fold under the pressure of Trump’s massive tariffs. Instead, they have retaliated with triple-digit tariffs of their own.
"All bullies are just paper tigers," the Chinese Foreign Ministry declared in a video last week. "Kneeling only invites more bullying."
The stakes are high between the world's two biggest economies, whose trade topped $660 billion last year.
While businesses and investors welcome any easing of tensions, the prospects for a quick and significant breakthrough appear dim.
"These are talks about talks, and China may be coming to assess what's on the table — or even just to buy time," said Craig Singleton, senior China fellow at the Washington-based think tank Foundation for Defense of Democracies. "There's no shared roadmap or clear pathway to de-escalation."
But if the two countries eventually agree to scale back the massive tariffs they slapped on each other's goods, it would relieve world financial markets and companies on both sides of the Pacific Ocean that depend on U.S.-China trade.
"The companies involved in this trade on both sides just cannot afford waiting anymore," said economist John Gong of the University of International Business and Economics in Beijing.
In a worst-case scenario, China could walk away from the negotiations if it feels the U.S. side isn't treating China as an equal or isn't willing to take the first step to deescalate, Gong said.
"I think if (Bessent) doesn't go into this negotiation with this kind of mindset, this could be very difficult," he said.
For now, the two countries can't even agree on who requested the talks.
"The meeting is being held at the request of the U.S. side," Chinese Foreign Ministry spokesperson Lin Jian said Wednesday. Trump disagreed. "They ought to go back and study their files," he said.
Tariffs meet economic reality
What seems clear is that Trump's favorite economic weapon — import taxes, or tariffs — has not proved as mighty as he hoped.
"For Trump, what's happened here is that the rhetoric of his campaign has finally had to face economic reality," said Jeff Moon, a trade official in the Obama administration who now runs the China Moon Strategies consultancy. "The idea that he was going to bring China to its knees in terms of tariffs was never going to work."
Trump views tariffs an all-purpose economic tool that can raise money for the U.S. Treasury, protect American industries, lure factories to the United States and pressure other countries to bend to his will, even on issues such as immigration and drug trafficking.
He used tariffs in his first term and is even more aggressive and unpredictable about imposing them in his second. He slapped a 10% tariff on almost every country in the world, blowing up the rules that governed global trade for decades.
But it's his trade war with China that has really put markets and businesses on edge. It started in February when he announced a 10% levy on Chinese imports. By April, Trump ratcheted up the taxes on China to a staggering 145%. Beijing upped its tariff on American products to 125%.
Trump's escalation sent financial markets tumbling and left U.S. retailers warning that they might run out of goods as U.S.-China trade implodes. U.S. consumers, worried about the prospect of empty shelves and higher prices, are losing confidence in the economy.
"This was not very well planned," said Zongyuan Zoe Liu, senior fellow in China studies at the Council on Foreign Relations. "I don't think he intended to have the tariffs escalate into this chaos."
China was ready
When Trump hit Chinese imports with tariffs during his first term, he claimed Beijing used unfair tactics, including cybertheft, to give its technology firms an edge.
The two countries reached a truce — the so-called Phase One agreement — in January 2020; China agreed to buy more U.S. products, and Trump held off on even higher tariffs. But they didn't resolve the big issues dividing them, including China's subsidies of homegrown tech firms.
China was ready for a rematch when Trump returned to the White House. It worked to reduce its dependence on America's massive market, cutting the U.S. share of its exports to 15% last year from more than 19% in 2018, according to Dexter Roberts of the Atlantic Council.
Beijing is confident that the Chinese people are more willing than Americans to endure the fallout from a trade war, including falling exports and shuttered factories.
"For China, it's painful, but it's also imperative to withstand it, and it's prepared to cope with it," said Sun Yun, director of the China program at the Stimson Center.