Historic Shift in US-China Trade War: Geneva Talks Redefine Global Trade Dynamics
I. Pivotal Negotiations: 16-Hour Talks Transform Economic Relations
From May 10 to 11, 2025, senior US-China economic officials engaged in marathon negotiations in Geneva, Switzerland. Chinese Vice Premier He Lifeng and US Treasury Secretary Jennifer Bessent, along with Trade Representative Kevin Greer, held closed-door talks lasting 16 hours, culminating in the US-China Geneva Economic and Trade Consultations Joint Statement. Both sides characterized the outcome as “substantial progress,” marking a critical turning point in the seven-year trade war.
Negotiation Context
The US had imposed multi-tiered tariffs (up to 34%) on Chinese goods since 2018, while China countered with rare earth export controls and retaliatory tariffs. Pre-negotiation data showed US tariffs on China averaged 145%, with China’s tariffs at 125%, resulting in a 30% decline in bilateral trade volume.
Key Achievements
- The US removed 91% of tariffs, suspended 24% tariffs for 90 days, retaining a 10% base rate
- China reciprocated with equivalent adjustments, covering $380 billion in trade
- Established a常态化经贸磋商机制 (regular consultation mechanism) with a joint working group
II. Backlash of Unilateralism: The Human Cost of Seven Years of Tariffs
US Commerce Secretary Howard Lutnick admitted on May 21, 2025: “China’s countermeasures have caused immense economic pain.” Key impacts include:
| Economic Indicator | 2025 Q1 Performance | Year-on-Year Change |
|---|---|---|
| GDP Quarterly Growth | -0.3% | ↓2.1% |
| Trade Deficit | $1.2 trillion | ↑18% |
| Consumer Inflation | 3.5% | ↑0.8% |
Critical Sectors
- Manufacturing: General Motors cut annual revenue forecasts by 12%, UPS laid off 20,000 workers
- Household Impact: Chinese goods prices surged 60%-80%, low-income families spent $2,300 more annually
- Alliance Fractures: EU imposed €95 billion tariffs on US goods, Mexico captured only 0.8% of US exports
III. China’s Strategic Resilience: Economic Strength and Diplomatic Artistry
Foreign Ministry official Liang Jianjun stated: “Only through struggle can respect be earned.” This resolve is underpinned by robust economic fundamentals:
Core Metrics
- 2023 GDP growth: 5.2%, Foreign Exchange Reserves: $3.2 trillion
- Semiconductor equipment localization: 35%, NEV exports dominate 60% of global market
- 2025 Q1 trade with US: $700 billion, absorbing 80% of tariff impacts
Strategic Moves
- Rare Earth Leverage: Export controls remain a key bargaining chip
- Supply Chain Diversification:
- $900 million agricultural deal with Argentina
- Yangnong Chemical’s $300 million Malaysia plant
- Market Expansion: Ruyi Holdings achieves product registration in 50 countries
IV. Unresolved Challenges: 90-Day Window and Lingering Disputes
Despite progress, core disagreements persist:
Outstanding Issues
- US retains 20% fentanyl-related tariffs
- US demands China’s semiconductor localization ≤50% (China targets 70%)
- Disputes over rare earth controls and green subsidies
Critical Deadlines
- August 2025: 90-day suspension of 24% tariffs expires
- Quarterly joint working group meetings
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