US and China Hold High-Stakes Trade Talks in Geneva Amid Escalating Tariff War

U.S. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer met with China's Vice Premier He Lifeng in Geneva on May 10, 2025, to address escalating trade tensions. This marks the first formal talks since President Trump increased tariffs on Chinese imports to 145%, prompting a 125% retaliatory tariff from China. The discussions, held at a confidential location, aim to de-escalate the trade war affecting global markets. Despite low expectations for a breakthrough, the talks are seen as a positive step towards reducing economic confrontation between the two largest economies.

High Tariffs Spark Urgent Diplomatic Engagement

The Geneva talks come amid a dramatic escalation in trade tensions. In April, President Trump announced sweeping tariffs on nearly all Chinese imports, raising the average rate to 145%. China responded in kind, slapping 125% tariffs on U.S. goods. These measures have effectively created a near-embargo on bilateral trade, which totaled over $660 billion last year.

The tariffs have already had a significant impact. According to China’s General Administration of Customs, Chinese exports to the U.S. dropped 21% in April compared to the same period last year. U.S. retailers, facing prohibitively high import costs, have begun canceling orders and shifting supply chains to other countries in Asia.

Despite the severity of the measures, President Trump hinted at a possible reduction ahead of the Geneva talks. In a post on Truth Social, he wrote, “80% Tariff on China seems right! Up to Scott,” referring to Treasury Secretary Bessent. However, the administration has made it clear that any reduction would not be unilateral. “China would need to make concessions as well,” said White House Press Secretary Karoline Leavitt.

Behind Closed Doors in Geneva

The talks began Saturday morning at a confidential location in Geneva, with both delegations arriving under heavy security. A motorcade of black vehicles was seen leaving the residence of the Swiss Ambassador to the United Nations in the suburb of Cologny, suggesting the site of the initial meeting. According to diplomatic sources, the two sides met for approximately two hours before departing for a scheduled luncheon.

This marks the first face-to-face meeting between Bessent and He Lifeng. While expectations for a breakthrough remain low, the fact that the talks are taking place at all is being viewed as a positive development. “If a roadmap can emerge and they decide to continue discussions, that will lower the tensions,” said Swiss Economy Minister Guy Parmelin, who met with both delegations on Friday.

A History of Unresolved Disputes

The current standoff is the latest chapter in a long-running trade conflict. In January 2020, the U.S. and China signed a Phase One agreement in which Beijing pledged to increase purchases of American goods in exchange for a pause on further tariff hikes. However, the deal faltered as the COVID-19 pandemic disrupted global trade, and China failed to meet its purchase commitments.

Underlying issues such as China’s industrial subsidies and technology transfer policies were left unresolved. These topics are now back on the table, with the U.S. accusing Beijing of unfair trade practices and failing to curb the export of chemicals used in fentanyl production. China, in turn, has accused the U.S. of economic bullying and has vowed not to bow to “imperialists.”

Swiss Involvement and Broader Trade Tensions

While the focus of the Geneva talks is the U.S.-China trade war, Switzerland has also found itself entangled in Washington’s tariff campaign. Last month, President Trump suspended plans to impose a 31% tariff on Swiss goods, reducing the rate to 10% for now, with a potential increase to 31% scheduled for next week. Swiss exports to the U.S.—including watches, coffee capsules, cheese, and chocolate—are at risk.

The Swiss government has taken a cautious stance, warning that retaliatory measures would harm its own economy. “An increase in trade tensions is not in Switzerland’s interests,” the government said in a statement, adding that it does not plan to impose countermeasures at this time.

Switzerland abolished all industrial tariffs on January 1, 2024, allowing 99% of U.S. goods to enter duty-free. The U.S. is Switzerland’s second-largest trading partner after the European Union, and bilateral trade has quadrupled over the past two decades.

Mixed Signals from Washington

The Trump administration has sent conflicting messages about its intentions. While the president has floated the idea of reducing tariffs to 80%, he has also threatened new duties on foreign-made toys and films. On Thursday, he said, “We’re going to see. Right now it’s at 145%. You can’t get any higher than that, so we know it’s coming down.”

Despite the rhetoric, officials have emphasized that the Geneva talks are not aimed at producing a comprehensive trade agreement. “The meetings in Switzerland would focus on de-escalation and not a big trade deal,” Bessent said ahead of the talks.

A Tentative Step Forward

With both sides wary of appearing weak, the Geneva talks represent a cautious first step toward reducing tensions. Analysts remain skeptical about the prospects for immediate progress. “The best scenario is for the two sides to agree to de-escalate on the tariffs at the same time,” said Sun Yun, director of the China program at the Stimson Center. “Even a small reduction would send a positive signal. It cannot just be words.”

As the weekend progresses, the world will be watching closely to see whether the U.S. and China can find common ground—or whether the trade war will continue to escalate, with global consequences.

References

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