President Donald Trump perceives that winning a trade war with China should be straightforward. According to his reasoning, China exports three times more to the United States than vice versa, resulting in a larger loss for them. By imposing significant tariffs—145% on Chinese imports—Trump believes China will eventually relent. Treasury Secretary Scott Bessent likened Beijing to a card player with a weak hand, asserting, “They’re playing with a pair of twos.”
However, China has shown resilience, countering with substantial tariffs of their own. The Chinese Foreign Ministry recently stated, “All bullies are just paper tigers. Kneeling only invites more bullying.” The stakes remain high between the two major economies, which had trade amounting to $660 billion last year. Bessent, along with Trump’s top trade negotiator Jamieson Greer, is headed to Geneva for preliminary discussions with Chinese officials. Trump indicated the U.S. might reduce tariffs, suggesting an 80% tariff could be appropriate.
While businesses and investors welcome any reduction in tensions, a swift resolution seems unlikely. Craig Singleton from the Foundation for Defense of Democracies remarked that these discussions are preliminary, possibly allowing China to evaluate the situation or delay. Should the countries agree to scale back tariffs, it would benefit global financial markets and businesses reliant on U.S.-China trade.
Economist John Gong from the University of International Business and Economics in Beijing cautioned that a failure to treat China as an equal partner might lead to China withdrawing from talks. There is even disagreement over who initiated the discussions, with the Chinese Foreign Ministry claiming the U.S. requested the meeting, a point Trump disputes.
Trump’s reliance on tariffs has not yielded the expected results. Jeff Moon, a former trade official under the Obama administration, noted the contrast between Trump’s campaign rhetoric and economic reality. He pointed out that using tariffs as a universal tool lacks effectiveness in coercing other countries.
Despite aggressive tariff strategies, especially targeting China, Trump’s actions have unsettled markets and businesses. Starting with a 10% levy on Chinese imports and later increasing it to 145%, Beijing reciprocated with a 125% tariff on American goods. This escalation caused financial concerns and reduced consumer confidence in the U.S.
When tariffs were first applied during Trump’s initial term, they were in response to allegations of unfair Chinese practices. A temporary truce was established in January 2020 through the Phase One agreement.
China had prepared for another confrontation by reducing its reliance on the U.S. market, decreasing exports to 15% from over 19% in 2018. Despite the challenges, the Chinese government appears determined to withstand economic pressures.
The Trump administration might have underestimated American dependency on Chinese imports, which account for a significant portion of consumer goods and manufacturing inputs. The tariffs imposed could lead to increased costs and reduced competitiveness for U.S. companies.
Louise Loo, an economist at Oxford Economics, highlighted China’s reduced dependence on the U.S. market, suggesting China could more easily find alternative markets than the U.S. could find new suppliers. Nonetheless, China faces economic impacts from the trade war, as noted by the International Monetary Fund’s downgraded economic outlook.
White House Press Secretary Karoline Leavitt emphasized China’s need for U.S. markets and expressed confidence in Secretary Bessent’s upcoming negotiations in Switzerland. Jens Eskelund, president of the EU Chamber of Commerce in China, expressed optimism about the meetings between U.S. and Chinese officials, comparing it to a conclave for selecting a new pope.