U.S. Treasury Secretary Scott Bessent is scheduled to meet Chinese Vice Premier He Lifeng, President Xi Jinping’s most loyal economic adviser, on Saturday. It’s not exactly a NATO summit to start work toward a deal on tariffs, but an opportunity seized by the Trump Administration after He Lifeng, invited by the Swiss government, will make a stop in Geneva to prepare for the 10th High-Level Economic and Financial Dialogue between China and France, to be held in Paris from May 12th to the 16th. Beijing let it be known that the talks will be held “at the request of the United States,” stressing that the Chinese position on tariffs “remains unchanged.”
“I look forward to productive talks as we work to rebalance the international economic system, “ Bessent told CNN after the Swiss government announced the invitation publicly. The Treasury secretary later said during a House hearing at the Financial Services Committee that meetings with Chinese officials will begin Saturday, that White House adviser Peter Navarro will not take part in the mission, and that he will be accompanied by Trade Representative Jamieson Greer. The Treasury Secretary sought to downplay expectations of an agreement and stressed the importance of normalization of tensions. He also said that in his opinion the situation is not sustainable, especially on the Chinese side, and that the current duties are basically an embargo. “We just want a fair trade relationship” with China, he told Congress.
Bessent is highly regarded on Wall Street and is widely considered the most serious and knowledgeable adviser on trade issues among the presidential cabinet members. The choice of Bessent then must also be seen as a White House response to the Chinese government regarding who President Trump’s proxy is on this issue after the “intrusions” of Navarro and Commerce Secretary Howard Lutnick on policy regarding tariffs.
The announcement of the meeting brightened the stormy world of financial markets, which rebounded after the Federal Reserve kept interest rates unchanged, even as President Trump insists that the Fed chair must cut the cost of money. After the announcement, all indexes turned positive.
“The main objective of this meeting is to establish the conditions for reaching an agreement, including defining what is feasible and what is not,” said Alfredo Montufar-Helu, head of the Conference Board’s China Center. “There could be immediate benefits, such as a temporary suspension of tariffs, which would bring much-needed relief to businesses in both countries.”
The United States has imposed duties of at least 145 percent on most Chinese imports, and China has responded with a 125 percent duty on some U.S. imports. The last of the duty-free ships—those at sea at the time the duties were announced—have almost all docked, and the first ships with tariffed goods are arriving at ports.
This means that companies in China and the United States will soon be faced with a difficult decision: pay a duty that doubles the cost of imported goods or stop selling them altogether. Equally, in a few days consumers will be confronted with the decision of whether to pay higher prices or give up purchases.
The imposition of the duties has already hurt both economies. The U.S. economy regressed in the first quarter, the first contraction in three years, as companies spent more to stockpile goods in anticipation of Trump’s tariffs, while Chinese manufacturing activity contracted at the fastest pace in 16 months.
Trump also imposed tariffs on most other countries around the world: a 10 percent universal duty on virtually all goods entering the United States, plus 25 percent duties on steel, aluminum, automobiles, auto parts and some goods from Mexico and Canada.
Economists from the International Monetary Fund, OECD and World Bank have predicted that Trump’s trade war would have disastrous effects on the global economy, drastically slowing growth in some countries and reigniting inflation. The United States is expected to be among the hardest hit economies as other nations, including China, react with higher tariffs. Many U.S. economists and big banks predict that the United States could enter recession this year.
