Tariff talks begin between US and Chinese officials in Geneva

The US treasury secretary and America’s top trade negotiator have begun talks with high-ranking Chinese officials in Switzerland in a bid to de-escalate a dispute that threatens to cut off trade between the world’s two biggest economies and damage the global economy.

The Xinhua News Agency said Washington’s treasury secretary Scott Bessent and US trade representative Jamieson Greer have begun meetings in Geneva with a Chinese delegation led by vice premier He Lifeng.

Diplomats from both sides also confirmed that the talks have begun, but the exact location of the summit was not made public.

Prospects for a major breakthrough appear dim. But there is hope that the two countries will scale back the massive taxes – tariffs – they have slapped on each other’s goods, a move that would relieve world financial markets and companies on both sides of the Pacific Ocean that depend on US-China trade.

US President Donald Trump last month raised US tariffs on China to a combined 145%, and China retaliated by hitting American imports with a 125% levy.

Tariffs that high essentially amount to the countries’ boycotting each other’s products, disrupting trade that last year topped 660 billion dollars (£497 billion).

Even before the talks began, Mr Trump suggested on Friday that the US could lower its tariffs on China, saying in a Truth Social post that “80% Tariff seems right! Up to Scott”.

Sun Yun, director of the China program at the Stimson Centre, noted it will be the first time He and Mr Bessent have talked. And she doubts the Geneva meeting will produce any substantive results.

“The best scenario is for the two sides to agree to de-escalate on the … tariffs at the same time,” she said, adding even a small reduction would send a positive signal.

“It cannot just be words.”

Since returning to the White House in January, Mr Trump has aggressively used tariffs as his favourite economic weapon. He has, for example, imposed a 10% tax on imports from almost every country in the world.

But the fight with China has been the most intense. His tariffs on China include a 20% charge meant to pressure Beijing into doing more to stop the flow of the synthetic opioid fentanyl into the United States.

The remaining 125% involve a dispute that dates back to Trump’s first term and comes atop tariffs he levied on China back then, which means the total tariffs on some Chinese goods can exceed the 145%.

During Mr Trump’s first term, the US alleged that China uses unfair tactics to give itself an edge in advanced technologies such as quantum computing and driverless cars.

These include forcing US and other foreign companies to hand over trade secrets in exchange for access to the Chinese market; using government money to subsidise domestic tech firms; and outright theft of sensitive technologies.

Those issues were never fully resolved. After nearly two years of negotiation, the United States and China reached a so-called Phase One agreement in January 2020.

The US agreed then not to go ahead with even higher tariffs on China, and Beijing agreed to buy more American products. The tough issues – such as China’s subsidies – were left for future negotiations.

But China did not come through with the promised purchases, partly because Covid-19 disrupted global commerce just after the Phase One truce was announced.

The fight over China’s tech policy now resumes.

Mr Trump is also agitated by America’s massive trade deficit with China, which came to 263 billion dollars (£198 billion) last year.

In Switzerland, Mr Bessent and Mr Greer also plan to meet with Swiss President Karin Keller-Sutter.

Mr Trump last month suspended plans to slap hefty 31% tariffs on Swiss goods – more than the 20% levies he plastered on exports from European Union. For now, he has reduced those taxes to 10% but could raise them again.

The government in Bern is taking a cautious approach. But it has warned of the impact on crucial Swiss industries like watches, coffee capsules, cheese and chocolate.