A Bold Strategy Ahead of Trade Negotiations
U.S. President Donald Trump has proposed an 80% tariff on imports from China, a move that would redefine the trade relationship between the world's two largest economies. The information was revealed through social media on Friday, a few days prior to scheduled trade negotiations between China and the U.S. in Switzerland.
"80% Tariff on China seems right," Trump posted on the internet, opening the door for escalation, as both nations gear up for deal-or-no-deal diplomatic talks.
China Answers with Confidence
China Vice Foreign Minister Hua Chunying answered with confidence, declaring Beijing has "full confidence" in how to handle trade tensions with the U.S. Her remarks came when both sides are preparing for talks to ease economic tensions.
Tariffs Already Taking a Toll
Trump has imposed tariffs of up to 145% on Chinese goods since April, shocking world financial markets and reducing two-way trade. Newly issued figures show that Chinese exports to America fell more than 20% in April compared to a year ago, while total Chinese exports rose 8.1% in a surprising surge.
Dan Wang of Eurasia Group, a political risk advisory firm, told the BBC, "The recent signals from both sides suggest a transactional de-escalation is on the table."
Talks Welcomed but Challenges Remain
The talks are a welcome step towards a solution, but analysts remain wary. Stephen Olson, a former U.S. trade negotiator, warned that the deeper issues would not be resolved overnight.
"The systemic frictions between the U.S. and China will not be resolved anytime soon," he said, continuing to forecast that any temporary tariff cuts will be "minor."
Negotiators and High Stakes
The initial round of negotiations will be led by U.S. Treasury Secretary Scott Bessent and China's Vice Premier and economic policymaker He Lifeng. But Olson noted, "any final deal will require the active engagement of both presidents."
Eswar Prasad, previously the director of the IMF's China department, went on further and added that a total tariff reversal would be unlikely. "At best, we might see a pullback from the current extreme tariffs, but high trade barriers and other restrictions will remain," he told BBC News.
Trump's Market Message
On Friday, Trump also called on China to "open up its market" to US companies. Any tariff adjustments, he stated, would be decided by "Scott B." The day before, Trump had referred to the upcoming meeting as "very friendly."
The U.K. Strikes a Deal First
The U.S.–China talks come on the heels of only two days since the U.K. finalized a tariff agreement with the Trump administration. The deal reduces import tariffs on British cars and certain metals, while providing for more access for U.S. beef and other commodities into U.K. markets.
The development has triggered a global dash by other countries to negotiate their own deals before Trump's sweeping new tariffs—signed in April—are implemented next month. A 90-day grace period was started to allow for negotiations.
U.S. Companies Prepare for Harm
Most American companies are getting a whiff of increased tariffs. Wild Rye, a Idaho outdoor clothing company for women, manufactures in China and is experiencing shipping costs through the roof.
CEO Cassie Abel explained to the BBC: "We have a \$700,000 order that's now going to cost us £1.2 million in levies—up from £200,000." She said she is now considering selling pieces of her business to cope with the extra cost.
While both parties are hopeful, the road to a resolution of the U.S.–China trade war will be long and complex. The proposed 80% tariff, symbolic or otherwise, is a testament to the high stakes involved in the negotiations ahead.
All eyes now turn to Switzerland, where the outcome of the talks may shape the world's economic landscape for years to come.