How difficult is the US -China agreement negotiation

On 10/5, US and Chinese officials are expected to meet in Geneva (Switzerland) to discuss trade issues. Many people expect the expectation of the excitement from the trade agreement with him to announce on May 9 will continue to spread. However, nothing guarantees this will happen.

“I only expect low levels. Because the tax rate is very high and so is the tension. The tax is easy, but it is much harder to remove,” said Wendy Cutler – Vice President of the Asian Social Policy Institute (ASPI). CNN.

President Donald Trump always oppose the trade deficit. He said that this shows that the United States is being “taken advantage of” and treated injustice.

Up to now, he has imposed additional import tax of 145% to all goods from China. Beijing also responded in 125% taxes for US goods. The two largest economies in the world are forecasted to suffer serious losses due to the trade war. Many signs of injury began to appear, both in production, consumption and GDP growth.

Therefore, both investors, businesses and consumers of the two countries want the situation to improve. They expect today’s meeting to bring positive changes. This will be the first official dialogue between senior US and Chinese officials in the second term of Mr. Trump.

Cutler said that during the meeting, Finance Minister Scott Bessent and US Trade Representative Jamieson Greer will mention the agreement with him. They want to prove that “American policies are promoting effectiveness” and other countries “are also concerned about China”.

However, the scale of agreement with him is quite small. This is also a relatively easy agreement.

He did not have room to negotiate more taxes. The country was only 10% pressure – the level that the Trump administration confirmed was very low and applied only to countries with balanced trade relations with the United States. Last year, the United States even a US $ 12 billion trade surplus with the UK.

Therefore, in the agreement achieved, 10% tax remains the same. Some British cars exported to the US were reduced taxes. Steel too. The Trump administration seems to be open to the possibility of more exemptions

“It is an almost balanced trade relationship. Meanwhile, China is a completely different story,” Cutler said on CNN.

According to the Chinese Customs announced, the US -China trade turnover reached 4,898 billion yuan (US $ 668 billion) in 2024. However, the US trade deficit with China is very large, up to 361 billion USD.

Almost no one expects this first round of negotiations to bring the US -China tax return as before the second term of Trump. Bessent also acknowledged that in the interview with Fox News: “I think this weekend discussion will focus on cooling down, not to achieve a large trade agreement.”

Recently, both sides have sought to minimize economic impacts from import taxes. The United States has temporarily exempted the reciprocal tax on electronic and computers, and loosened taxes on cars. Meanwhile, China is said to be exempt from import tax with some types of pharmaceuticals, chips and aircraft engines from the US. Reuters said the country also made a “white list” of American items exempted from additional tax.

On May 8, Mr. Trump said he did not consider lowering taxes to drag China to sit at the negotiating table. However, on May 9, he wrote on the Truth Social social network that “80% tax on Chinese goods seem appropriate”. This is considered a positive signal.

Meanwhile, Chinese officials are more cautious. They repeatedly called on the US government to “fix the mistake” by canceling unilateral tax rates. On May 8, Chinese Ministry of Commerce spokesman affirmed that the country “would not sacrifice the principle to reach an agreement with the US”.

Susan Shirk – Professor at UC University San Diego said that Chinese officials were acting more disciplined than previous negotiations with the United States: “They are suspicious of Mr. Trump and will be very cautious.” Shirk thinks this is putting pressure on the president of the United States. She predicted that China would express “goodwill to reduce export waves, not only to the US but also to other countries”.

With Cutler, the best actual result from today’s meeting is that the two sides achieved “a roadmap for the next contact”. It is important that this can create a momentum for a phone call between Mr. Trump and Xi. On May 9, the US President also said that he could consider Call Xi, depending on the results this weekend.

In contrast, the bad scenario is also likely to occur, causing both governments to make more extreme moves. Both Cutler and Shirk recalled the 2021 meeting between US and Chinese diplomats in Alaska. In particular, the atmosphere quickly worsened when officials of both sides publicly criticized each other with harsh words in front of the press.

“The worst thing is a big confrontation right before the media,” Shirk said. “That is exactly the type of meeting that everyone wants to avoid,” Cutler said. He used to hold the position of US Trade Representative under Obama.

Another bad scenario will be the United States and China “hold a tough stance and cannot find a common voice to go further”. At that time, the risk of escalating import tax battle will increase.

Above CNBCTianchen Xu – a senior economist at research firm Eiu said that the effort to reach a comprehensive agreement “will take a lot of time and may not bring the desired results”. The reason is that both sides are not willing to give in to strategic priority issues.

“We think that the US and China will be difficult to achieve something similar to trade agreement in phase one,” Xu said.

In January 2020, the two countries signed an agreement after more than a year of tense negotiations. Details of trade agreement in the first phase between the two sides were announced by the White House long, including 8 chapters.

Including intellectual property regulations in China, committed to China to buy at least US $ 200 billion in US goods and services in the next two years, as well as no monetary manipulation. In return, the US reduces taxes on some Chinese goods. However, Beijing later did not achieve the goals of shopping by Covid-19.