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Saturday, May 10, 2025

Trump Proposes Reducing Tariffs from 145% to 80%, but China Yet to Agree in Initial Geneva Meeting


                                                



CALITODAY (May 10, 2025) — On Saturday, May 10, high-level economic officials from the United States and China concluded the first day of trade negotiations in Geneva, Switzerland, with limited progress.

The U.S. delegation, led by Treasury Secretary Scott Bessent, and the Chinese delegation, headed by Vice Premier He Lifeng, are preparing for a second day of talks on Sunday, May 11.

These discussions carry significant weight, as the ongoing trade war initiated by President Donald Trump has already impacted the global economy.

Neither side has provided immediate details about the day's negotiations.

This meeting marks the first since President Trump increased tariffs on Chinese imports to 145%, prompting China to retaliate with a 125% tariff on U.S. goods.

These actions have effectively halted trade between the world's two largest economies and heightened the risk of a global economic downturn.

Despite the high stakes, expectations for a breakthrough remain low. It took weeks for both countries to agree to these talks, and analysts predict that discussions will focus on understanding each side's positions and exploring potential negotiation pathways. China has shown little willingness to compromise, while President Trump has suggested reducing tariffs from 145% to 80% as a conciliatory gesture.

The fact that Beijing and Washington are engaging in negotiations has raised hopes that tensions might ease and tariffs could eventually be lowered.

The imposed tariffs have disrupted global supply chains and increased costs for consumers worldwide.

Economists and investors are closely monitoring the talks, concerned that a prolonged economic conflict between the U.S. and China could lead to slower global growth and higher prices. Businesses, especially those reliant on Chinese imports, are on high alert as they navigate the challenges posed by the new tariffs and the uncertainty surrounding their duration.

"Both the U.S. and China have strong economic and financial interests in de-escalating trade tensions, but a lasting truce seems unlikely," said Eswar Prasad, former head of the China division at the International Monetary Fund. "However," he added, "the initiation of high-level talks indicates significant progress, offering hope that both sides will temper their rhetoric and avoid further public hostilities in their economic relationship."

The Trump administration's negotiating team includes Treasury Secretary Scott Bessent, a former hedge fund manager who has criticized the sustainability of current tariff levels, and U.S. Trade Representative Jamieson Greer, who was instrumental in crafting Trump's initial trade agenda, including the "Phase One" deal with China. Notably absent from the talks is Peter Navarro, Trump's hawkish trade advisor.

China's delegation is led by Vice Premier He Lifeng, responsible for economic policy. The Chinese government has not disclosed the full list of attendees, leaving it unclear whether Public Security Minister Wang Xiaohong, who oversees China's narcotics control committee, is participating.

His involvement would suggest that discussions might also address Trump's concerns about China's role in the fentanyl crisis in the U.S.

The trade war has already inflicted damage on both economies. On Friday, May 9, China reported a 21% year-over-year decline in exports to the U.S. for April. Several major U.S. companies have announced impending price increases to offset the tariffs, contradicting Trump's promise to curb inflation.

One American car battery manufacturer has declared it will shut down operations due to the unavailability of Chinese-sourced materials, which are irreplaceable globally.

On the same day, after President Xi Jinping maintained a firm stance, President Trump indicated a willingness to reduce tariffs on Chinese imports from 145% to 80%. Later, discussing the trade talks, Trump stated, "We must secure a great deal for America," adding that he wouldn't be disappointed if an immediate agreement wasn't reached, suggesting that no deal could still be beneficial for the U.S.

Trump reiterated his proposal to lower tariffs to 80%, noting, "We'll see how that unfolds." His administration has accused China of unfairly subsidizing key industries and flooding global markets with cheap goods. The U.S. has also pressured China to take stronger measures against the export of fentanyl precursors, a drug responsible for millions of American deaths.

China has consistently stated it has no intention of making trade concessions in response to Trump's tariffs. Officials emphasize that China agreed to these talks at the U.S.'s request, not out of necessity. The Chinese Ministry of Commerce asserts that China has alternative markets for its goods, whereas the U.S. struggles to find substitutes for Chinese-sourced materials.

"This tariff war was initiated by the U.S.," said Liu Pengyu, spokesperson for the Chinese Embassy in Washington. "If the U.S. truly seeks a negotiated solution, it should cease threats and pressure, and engage in talks with China on the basis of equality, mutual respect, and mutual benefit."

While Trump has proposed reducing tariffs to 80%, China remains unsatisfied. Beijing aims to revert tariffs to approximately 20%, the rate in effect before Trump's initial 34% tariff hike in early April, which sparked the current cycle of retaliatory measures, according to Wu Xinbo, Director of the Institute of International Studies at Fudan University in Shanghai.

"If we can return to that level, I believe it would be a significant step toward more constructive negotiations," Wu said. He noted that China is prepared to discuss fentanyl as a separate issue and had offered to meet with the Trump administration in February after the initial tariff announcements, citing concerns over the illicit flow of fentanyl into the U.S.

The U.S. and China are meeting near the headquarters of the World Trade Organization (WTO), which has criticized Trump's tariff wars. The WTO has warned that continued economic fragmentation into rival blocs could reduce global GDP by nearly 7% over time, disproportionately affecting the world's poorest nations. A WTO spokesperson welcomed the talks as a step toward easing tensions.Reuters

An alternative scenario—where the U.S. and China cease trade relations—could lead to economic harm and instability. American consumers, who rely on affordable Chinese goods, might soon face empty store shelves and higher prices for remaining products.

The National Retail Federation reported on Friday, May 9, that U.S. import volumes are expected to decline this year for the first time since 2023, attributing the drop to Trump's tariffs. Jonathan Gold, the federation's vice president for supply chain and customs policy, stated, "We're beginning to see the real impact of President Trump's tariffs on supply chains." "Ultimately, these tariffs will affect consumers through higher prices and reduced product availability."

The Trump administration has been racing to secure trade agreements with 17 major partners following the suspension of reciprocal tariffs announced in April. On Friday, May 9, Trump praised a preliminary deal with the UK as evidence that his tariff strategy is effective.

Economists are encouraged by signs that the White House may be ready to reduce tariffs, viewing Trump's policy as counterproductive. "The rush to showcase progress in 'deals' indicates growing desperation within the Trump administration to lift tariffs before they impact GDP growth and inflation," wrote Paul Ashworth, chief North American economist at Capital Economics, in a client note. "With a decline in container shipments from China raising concerns about impending shortages in the U.S., pressure is mounting on the Trump administration to ease the tariff increases."

Capital Economics estimates that if the U.S. lowers tariffs on China to 54%, the overall effective tariff rate on imports would drop from 23% to 15%, aligning growth and inflation forecasts with earlier projections based on Trump's campaign commitments.

It's unclear whether Trump will accept a 54% tariff rate. On Friday, he suggested he was prepared to reduce tariffs to 80%, granting Treasury Secretary Scott Bessent the authority to negotiate with the Chinese delegation.ABC News

"An 80% tariff on China seems appropriate! It's up to Scott B.," Trump wrote on Truth Social, his social media platform.

Later, his press secretary, Karoline Leavitt, clarified that the 80% figure was not an official proposal but rather "a number the president mentioned." She added that Trump would not lower tariffs on China unless Beijing also made concessions.

However, a growing number of supporters have quietly expressed dissatisfaction with Trump's handling of tariffs, including his recent threats against foreign-produced films.

They are increasingly uncomfortable with the tariff discussions and market volatility, perceiving the administration's recent shifts as reactive.

Trump's focus on imposing tariffs on films this week has further unsettled Republicans.

"It's becoming absurd," a Republican strategist told The Hill. "This will continue to hurt Americans who voted for Donald Trump, not Democrats concerned about living costs."

A former aide to Trump who worked on his 2020 campaign stated that the tariff discussions are "not sitting well" with many of the voters who supported him.AOL

"They didn't vote for him to shake up the markets and make weak arguments about movies," the former aide said. "They voted for him because they wanted to recreate the economy of Trump's first term."

Polls indicate that Republicans are not entirely united with Trump on his recent tariff actions, even as consumer confidence is affected and business leaders express deep uncertainty.

A Washington Post/ABC News/Ipsos poll released at the end of April found that 64% of Americans surveyed disapprove of Trump's plan to increase import tariffs, while only 34% approve.

The poll concluded that this issue is among the least popular of Trump's second presidential term to date.Daily Herald+4The Washington Post+4The Washington Post+4

Due to public dissatisfaction, disagreements between the president and his supporters are emerging as the tariff discussions drag on and markets react to the surrounding chaos.

And that's probably not what Trump wants right now, as he seeks to reduce tariffs on China to 80% and as trade negotiations begin in Switzerland on Saturday.

Veteran GOP strategist Kevin Madden noted that while most Republicans—especially the MAGA base—still support the president's efforts around tariffs, "there are dissenting groups... and growing awareness of the negative impact of the domestic trade war in states and districts."AOL

Another former Trump aide didn't mince words, stating that there was never any real substance behind the proposals and no clear directive on how to handle such a complex issue.

Although few want to confront Trump directly on this matter, some Republicans predict that Trump will face increasing pressure as the next year's midterm elections approach. The closer GOP lawmakers get to the midterms, the more anxious they become.

Some Republicans fear that the House is at risk due to the slim margin over Democrats. If voters are dissatisfied with Trump's current tariff and deportation policies, it could lead to defeats for Republican candidates and allow Democrats to take control of the U.S. House of Representatives in the upcoming 2026 midterm elections.

While there's still time and lawmakers haven't yet felt the heat, they acknowledge that Trump risks losing support over this tariff issue.

"If he doesn't quickly find a solution, things won't end well," the first former aide said. Meanwhile, on social media platforms, Donald Trump is promoting a line of wristwatches bearing the Trump brand, personally touted by Trump as being of exceptional quality. It's believed that these watches were recently manufactured in China, as were the "Trump 2028" hats preparing for Trump's third term, which have also been produced in China!

HANH DUONG
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