The US-China trade talks wrapped up in Geneva: An agreement was reached to cut the $1.2 trillion trade deficit and set up a consultation mechanism.

Taiwan • Business • 05/12 01:24
The US-China trade talks wrapped up in Geneva: An agreement was reached to cut the $1.2 trillion trade deficit and set up a consultation mechanism.

On May 11, 2025, the United States and China concluded a two-day high-level economic and trade talks in Geneva, Switzerland, where they reached a consensus on several key issues. This marked the first high-level talks since President Trump imposed tariffs on Chinese goods earlier this year. The agreement aims to reduce the U.S. trade deficit by $1.2 trillion and establish a mechanism for U.S.-China economic and trade consultations. Both parties are set to release a joint statement on May 12, detailing the agreement.

Key Updates

05/12 10:25

2025 U.S. CPI Report: Trump Tariffs Unexpectedly Slow Inflation, Drawing Attention from Economists

The U.S. Consumer Price Index (CPI) report for April of 2025 is about to be released, with inflation expected to stay at 2.4% and core CPI at 2.8%. Despite the Trump administration's imposition of tariffs up to 145% on countries such as China, economists note that these tariffs have temporarily suppressed inflation. This situation has caught the attention of both the market and policymakers, with the Federal Reserve opting to take a wait-and-see approach. Economists caution that inflationary pressures could surface in the next few months, with core CPI possibly climbing to 4% by year's end.

05/12 10:25

Yi-Tsai Yen, General Manager of T3EX: Global container shipping rates are rebounding, and shipping companies are adopting strategies for steady capacity management.

On May 12, Yen Yi-Tsai, General Manager of T.S. Lines, stated that global container shipping rates have stopped falling and are rising again, with expectations that they will continue to rise in the third and fourth quarters. Progress in the US-China tariff negotiations has helped restore market confidence, and the rebound in shipping rates is closely tied to changes in tariff policies. Shipping companies, flush with cash, have shifted their strategy to maintaining stable capacity and are no longer slashing prices to compete for cargo. With US retailers holding low inventory levels, a wave of restocking is expected to push shipping rates higher. Key factors influencing shipping rates include tariffs, the US dollar, US Treasury bonds, and geopolitical risks.

05/12 08:57

The US and China Reach Provisional Tariff Agreement in Geneva: Significant Tariff Reduction Over the Next 90 Days Aimed at Easing Trade Tensions

On May 12, 2025, after high-level economic and trade talks between the United States and China in Geneva, Switzerland, the United States and China announced a temporary 90-day tariff agreement. The United States will lower tariffs on Chinese goods from 145% to 30%, while China will lower tariffs on American goods from 125% to 10%. This move is intended to ease trade tensions and set up a framework for future economic and trade talks. Both parties committed to implementing the tariff adjustments by May 14 and suspending or canceling most retaliatory measures.

05/12 06:26

The U.S. core CPI is expected to rise in April, businesses are facing challenges in passing on tariff costs, and the slowdown in consumer spending is raising economic concerns.

The U.S. core Consumer Price Index (CPI) for April is projected to increase by 0.3%, indicating a rise in inflationary pressures. Businesses are encountering a new wave of tariff pressures and are trying to pass these costs onto consumers, but the slowing demand is limiting the effectiveness of these efforts. Retail sales data is anticipated to remain unchanged, indicating consumer anxiety about the economic outlook. The Federal Reserve has cautioned that uncertainty in trade policy could increase inflation and unemployment, posing a risk to the economy.

05/12 02:59

Director of the CBO Warns: Trump's trade policies undermine confidence in foreign investment, the status of the dollar and the sustainability of U.S. debt face challenges.

Phillip Swagel, the director of the Congressional Budget Office, stated in an interview with The Financial Times that President Trump's trade policies and tariffs have had an impact on Wall Street and could potentially affect foreign investors' confidence in U.S. assets. While a 10% tariff might reduce the deficit, its impact on market confidence and the dollar's status cannot be overlooked. With the rise in U.S. debt interest expenses, the CBO and policymakers view U.S. debt as being on an unsustainable trajectory.

05/12 01:24

The US-China trade talks wrapped up in Geneva: An agreement was reached to cut the $1.2 trillion trade deficit and set up a consultation mechanism.

On May 11, 2025, the United States and China concluded a two-day high-level economic and trade talks in Geneva, Switzerland, where they reached a consensus on several key issues. This marked the first high-level talks since President Trump imposed tariffs on Chinese goods earlier this year. The agreement aims to reduce the U.S. trade deficit by $1.2 trillion and establish a mechanism for U.S.-China economic and trade consultations. Both parties are set to release a joint statement on May 12, detailing the agreement.

05/11 22:55

The US and UK Reach a New Tariff Agreement, Talks Between the US, China, and Switzerland Begin: A Ray of Hope for the Global Trade Situation

In May 2025, the United States and the United Kingdom reached a bilateral trade agreement under a new tariff policy, which grants tariff reductions for British-made automobiles and steel products, reducing the base tariff to 10%. U.S. and Chinese officials met in Geneva, Switzerland, agreeing to set up a mechanism for economic and trade consultations, and a joint statement will be released on May 12. Market sentiment remains optimistic, U.S. Treasury yields have remained stable, and the Federal Reserve kept interest rates unchanged at its May 7 meeting, with the benchmark rate range at 4.25% to 4.50%.

05/11 18:25

Trump's announcement of a 145% tariff sparks market volatility, as U.S. inflation data indicates rising trends.

On April 2, 2025, U.S. President Donald Trump announced a 145% tariff on Chinese imports and threatened to take similar measures against Mexico, the EU, and other countries, leading to global market turmoil and sparking domestic controversy in the United States. April U.S. inflation data showed an estimated 0.3% increase in core CPI, indicating the potential impact of the tariff policy on prices. This policy, led by Trump's economic advisory team, aims to bring manufacturing back to the United States and act as leverage in trade negotiations.

05/11 14:25

An Experiment by American Small Business Owners Reveals Consumer Willingness to Pay High Prices for "Made in USA" Products: Results That Give Food for Thought

Afina Showerhead Filter founder Ramon van Meer tested if consumers are willing to pay more for products "Made in USA" amid US-China trade tensions. He sold two identical products on his website, one priced at $129 made in China and the other at $239 made in the USA. The results showed that 584 customers opted for the China-made version, while no one purchased the USA-made version, indicating that consumers are not willing to pay extra to support American manufacturing. Van Meer plans to shift production to other Asian countries to cut costs.

05/11 03:53

Thaw in US-China Trade War: Geneva Talks Begin, Four Major Sectors in the Taiwan Stock Market Preparing for Rotation

On May 10, 2025, high-level representatives from the US and China held their first formal talks in Geneva, Switzerland, in an attempt to ease economic tensions caused by punishing tariffs. The talks, led by US Treasury Secretary Besant and Chinese Vice Premier He Lifeng, lasted eight hours and are set to continue on May 11. The Taiwan stock market showed signs of capital rotation, with four major sectors likely to be affected. Ukraine and the India-Pakistan regions announced ceasefires, easing global market sentiment.

Swiss Talks: Breakthrough Achieved After Two Days of Intensive Negotiations

The talks were held from May 10 to 11 in Geneva, Switzerland, at a lakeside villa at the Swiss Permanent Mission to the United Nations. The U.S. delegation was led by Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer, while the Chinese side was headed by Vice Premier He Lifeng, including senior officials such as Vice Minister of Commerce Li Chenggang and Minister of Public Security Wang Xiaohong.

The discussions focused on issues such as tariff disputes, trade deficits, fentanyl smuggling, and the establishment of a long-term dialogue mechanism. Both sides engaged in 16 hours of intensive closed-door negotiations, ultimately reaching a preliminary agreement.

Key Points of the Agreement: Reducing Trade Deficit and Institutionalizing Dialogue

U.S. Trade Representative Greer stated after the meeting that the agreement reached would help reduce the U.S. global goods trade deficit, which amounts to $1.2 trillion. He noted, "The agreement we reached with our Chinese partners suggests that our differences may not be as significant as initially believed."

According to U.S. Treasury Secretary Bessent, this agreement is an important step for the Trump administration in addressing the "national emergency" of the long-term U.S. trade deficit with China. Although specific details of tariff adjustments have not been disclosed, President Trump had previously indicated a willingness to reduce the punitive tariffs on Chinese goods, currently as high as 145%, to 80%.

The Chinese side emphasized that both parties agreed to establish a "China-U.S. Economic and Trade Consultation Mechanism," led by senior officials from both sides, to facilitate regular or ad-hoc communication on trade and commercial issues. Vice Premier He Lifeng described the talks as "frank, in-depth, and constructive," noting that it was "an important step in resolving differences through equal dialogue and consultation."

Non-Tariff Issues: Fentanyl Problem Included in Negotiations

Non-tariff issues also played a significant role in the talks. The presence of Chinese Minister of Public Security Wang Xiaohong indicated that the fentanyl issue was a core topic of negotiation. The Trump administration had previously attributed a 20% tariff increase to China's failure to effectively prevent fentanyl from entering the U.S. The inclusion of high-level officials responsible for public security and drug control from China demonstrated the importance placed on this issue.

According to U.S. officials, the inclusion of the fentanyl issue symbolizes a move towards institutionalized dialogue in areas of cooperation beyond economic and trade matters.

Joint Statement to Be Released on May 12

Although the specific terms of the agreement have not yet been disclosed, both sides have confirmed that a joint statement will be released on May 12 (Monday). Chinese representative Li Chenggang stated, "No matter when this statement is released, it will be good news for the world." The U.S. emphasized that President Trump is fully informed of the progress of the talks and is satisfied with the outcome.

U.S. Secretary of Commerce Howard Lutnick expressed optimism in an interview with CNN, saying, "We are optimistic that things will proceed smoothly." White House economic advisor Kevin Hassett also noted that China is "very eager" to restart dialogue with the U.S. and reshape bilateral trade relations.

Establishing a Consultation Mechanism: Institutionalizing Future Dialogue

Both China and the U.S. agreed to establish an economic and trade consultation mechanism, co-led by Bessent and He Lifeng. This mechanism will serve as an institutional platform for bilateral economic and trade dialogue, covering issues such as tariffs, non-tariff barriers, industrial policies, intellectual property, and supply chain security.

The Chinese side stated that the mechanism will "explore cooperation potential, expand the list of cooperative efforts, and grow the cooperation pie," emphasizing the importance of China-U.S. economic and trade relations for global economic stability.

References

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