Is a settlement around the corner for the US and China trade war? It would appear so with key economic leaders having another go at things in Switzerland.
High-ranking representatives from the US and China met on Saturday, marking their countries first major conversation since President Trump further tarred China in January.
After Beijing exerted its retaliatory tariffs, a deadlock erupted as each country surged its tariffs on the other country.
The US has put tariffs of 145% on Chinese imports while Chinese exports to the US are exposed to charges of up to 125%.
Antagonistic words were thrown around for several weeks, with allegations hurling past both sides trying to come off more needy.
And yet, this weekend, representatives of both sides will meet in face-to-face negotiations.
So why now?
US and China Are Saving face
It looks like the US and China are still actively sending the message that they want to move on from this deadlock.
It could not be said that the US or China would be the first to admit negotiations.
“This is where there is an interest on both sides to avoid the appearance of retreat,” said Stephen Olson, senior visiting fellow at Singapore’s ISEAS-Yusof Ishak Institute, a former US trade negotiator.
Both countries have chosen to reinitiate talks now due to the perception they can go ahead without seeming to capitulate.
But China’s foreign ministry spokesperson Lin Jian underscored Wednesday that “the discussions are happening at the demand of the US”.
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And the commerce ministry compared the initiative to a goodwill gesture to the United States while, explaining away, it was catering for the demands of companies and consumers in the US.
By contrast, the Trump administration adamantly claims that the Chinese government is quite willing to negotiate; it finds itself in trouble with its economy lying on the verge of a meltdown.
“They said we initiated? I think they should check their records at some point,” Trump said during a Wednesday press conference at the White House.
Just before the discussions, the president’s language became more diplomatic: “We can all play games.
In a press briefing on Thursday, he added, “What matters most is what happens in that room”. What is important is what is agreed in those meetings.
The event of Xi’s visit to Moscow intensifies the conversations in Washington. On Friday Xi attended Moscow’s Victory Day parade as a guest of honour, celebrating the 80th anniversary of Germany’s defeat in World War Two.
With representatives from the Global South behind him, Xi reminded Trump’s administration of their country’s efforts to increase its trading partners and desire to be the world’s leader.
This step makes it possible for China to keep up a show of power even going into the negotiating process.
The pressure is on
Trump believes imposing tariffs will strengthen America, and Beijing promises to “fight till the end”; the truth, though, is that both countries are losing here.
China’s factory output has also slowed down according to the numbers presented by the government. April’s showed the weakest manufacturing level since December 2023.
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As reported by Caixin, one of China’s leading news outlets for 7 months services activity has decreased to its bottom level.
The stiff tariffs have obviously sent ripples through Chinese exporters who have warehouses brimming with stock eager to find a horizon outside us and with a tough noose around their necks.
According to Hofman, and as a professor in East Asian Institute, National University Singapore, it becomes clear that China now perceives a deal as a better option than not reaching an agreement.
So, they have embraced a practical outlook in deciding ‘We need to engage these negotiations immediately’.
Beijing officials have opted to start afresh in the dialogue process at this point in time when the major May Day celebration in China is drawing to a close.
By imposing tariffs the U.S. economy endured its first contraction since three years, partly because of increased uncertainty they provoked.
Such businesses that rely mainly on imported Chinese products have special considerations.
“Our supply chain is being completely disrupted”—so the chairman of a Los Angeles-based toy company predicts.