Representatives from the United States and China began sensitive negotiations in the Swiss city of Geneva on Saturday, discussions that could influence the future of a global economy markedly affected by the tariff conflict initiated by US President Donald Trump. US Treasury Secretary Scott Bessent met with Chinese Vice Premier He Lifeng. Further meetings are scheduled between officials, including US Trade Representative Jamieson Greer and Chinese counterparts, with a second round of talks planned for Sunday. The commencement of dialogue, though with low expectations for an immediate major breakthrough, has raised some hopes for an eventual easing of tensions and a reduction in tariffs that have impacted global supply chains and consumer costs. Mr Trump has indicated a potential openness to reducing tariffs, stating this week that current tariffs of 145% "cannot go any higher." On Friday, he suggested a reduction to 80%. White House spokeswoman Karoline Leavitt said Trump mentioned that 80% "might seem like a suitable figure for him," noting his continuous communication with the Treasury Secretary, who is leading this week's negotiations. Some US administration officials believe this figure could be a public signal from Trump to encourage Bessent to secure an agreement reducing tariffs to approximately 80%, The Wall Street Journal reported. However, Commerce Secretary Howard Lutnick stated in televised remarks that the President is likely to maintain significant reciprocal tariffs with China but might accept a rate around 34%, a figure he announced on 2 April. Washington is expected to seek concrete commitments from China, particularly regarding fairer trade practices and efforts to curtail the smuggling of Fentanyl into the United States, before agreeing to any tariff reductions. Trump has frequently criticised China's industrial dominance. According to The Wall Street Journal, a previous Chinese initiative on the Fentanyl crisis helped pave the way for these talks, and Washington has provided Beijing with proposals on tackling the trade in chemicals used for Fentanyl production. Beijing, in turn, is reportedly considering increasing purchases of US products and enhancing US investments, The Wall Street Journal noted, citing sources close to Chinese decision-making circles. However, these discussions are unlikely to result in a comprehensive trade agreement at this stage. The ongoing trade war has reportedly caused disruptions in China, with factories halting production and placing workers on leave, potentially exacerbating an economic slowdown. To address these pressures, Chinese President Xi Jinping dispatched senior aides to Switzerland, including Vice Premier He Lifeng and Minister of Public Security Wang Xiaohong. China holds significant leverage through its control over the global supply of many critical minerals and its near-monopoly in the rare earth elements industry, essential for various technologies. Analysts anticipate Beijing may use this as a bargaining chip. The Chinese delegation is expected to present proposals for de-escalating trade tensions, while Beijing has maintained that Washington should remove all 145% tariffs on Chinese goods. Swiss authorities are reportedly pursuing their own trade interests during the high-level visit. Swiss President Karin Keller-Sutter told reporters on Friday that Swiss and Chinese officials had discussed a new free trade agreement. She also mentioned that US officials, in her meetings with Bessent and Greer, indicated an unspecified agreement might be nearing finalisation. Despite the high stakes, The New York Times reported that expectations for a major tariff reduction breakthrough are low. The focus of this week's discussions is likely to be on defining each side's objectives and outlining a path for future negotiations. The trade dispute has already impacted global economies. China reported a 21% year-on-year decline in its exports to the United States in April. Some major US companies have indicated potential price rises to offset tariffs, contrasting with Trump's pledge to "end inflation." The U.S. National Retail Federation said on Friday that inbound shipments to the United States are expected to fall this year for the first time since 2023, attributing this to Trump's tariffs. The talks are taking place near the headquarters of the World Trade Organization (WTO), which has criticised the tariff wars. The WTO has warned that a fragmented global economy could reduce global GDP by approximately 7% in the long term. This US-China engagement occurs as Beijing strategically manages its diplomatic ties with other key partners, including Russia and the European Union. China is deepening energy cooperation with Russia and promoting bilateral trade in local currencies. It is also preparing for a July summit with the EU to mark 50 years of diplomatic relations, with the EU ambassador in Beijing telling Asharq the event should focus on "laying the foundation for another fifty years of excellent relations." Recent developments include Chinese President Xi Jinping's visit to Russia in early May, which resulted in over 20 cooperation agreements, particularly in energy. Chinese firms are reportedly in discussions for involvement in Russian LNG projects, building on existing stakes in ventures like Yamal LNG and Arctic LNG 2. The Eastern Gas Pipeline, operational since 2019, already supplies a significant portion of China's natural gas demand.
