The trade war between the world's two largest economies seems to be moving towards a more conciliatory new phase as they approach a potential truce. After a tough exchange of tariff blows, the US and China have eased tensions in recent weeks, and now their top negotiators will meet for the first time. The meeting will take place on neutral ground, in Switzerland.
US Treasury Secretary, Scott Bessent, and Trade Representative, Jamieson Greer, will meet with top Chinese economic official, He Lifeng, later this week. This marks the starting point for negotiations. "After fully considering global expectations, China's interests, and the demands of US industry and consumers, China has decided to cooperate with the United States," the Chinese Ministry of Commerce stated on Wednesday.
He (70 years old) is China's Vice Premier and heads the key economic body of the Asian superpower. Until recently, he was a relatively unknown figure outside his country. Now, he succeeds veteran negotiator Liu He as China's main negotiator, who was the architect of the trade agreement during the first Trump administration. Unlike his predecessor, He does not speak English, which is a disadvantage because, despite having many translators on both teams, key negotiations are always face-to-face and sharing a language helps facilitate frank conversations without intermediaries. This was crucial in resolving previous conflicts.
Trump, after starting his second term with an initial 20% tariff on Chinese imports, escalated to 34% and then 84%. Beijing retaliated in kind. Trump raised tariffs on the Asian giant to 145%, to which China responded with a 125% increase, while Communist Party officials kept repeating a phrase that became a mantra: "We will fight to the end."
China also employed other tactics, such as adding a dozen US companies, including major defense firms, to its export control blacklist and restricting exports of critical minerals essential for US companies to manufacture chips and other tech products. They also dealt a direct blow to Hollywood by announcing a reduction in the number of US films screened in the world's second-largest cinema market.
Trump stated in early April that he was ready to reach an agreement with China, but insisted that Chinese leader, Xi Jinping, should make the first call to initiate talks. However, Xi has not made the call despite Trump's claims of having spoken with the Chinese president on two occasions.
Beijing stood firm, and Trump eventually backed down, exempting certain electronic devices manufactured in China (smartphones, computers, hard drives, memory chips, and semiconductor manufacturing equipment) from his so-called "reciprocal tariffs."
China retaliated at the end of April, targeting the aerospace industry, instructing its airlines to reject further Boeing deliveries and cease purchases of US aircraft equipment and parts. Shortly after China returned the first two Boeing planes that had arrived in its territory, Washington expanded the trade dispute with tariffs on imports of solar panels produced by Chinese manufacturers in Southeast Asian countries.
In the past two weeks, China's top financial regulators have announced several measures to support the economy and markets as the trade war's impact intensifies. This Wednesday, Beijing unveiled a set of policies to shield itself from US tariffs.
China's central bank governor announced interest rate cuts and liquidity injections into the banking system, among other monetary policy easing measures.