Trade War

Newsletter 259 `- May 11, 2025

Welcome to the 259th edition of Trade War.

Trade talks to continue for second day as Trump touts “great progress” made. Experts say Beijing has upper hand in negotiations. And Washington mulls reducing tariffs below 60%.

PBOC cuts interest rates and lowers bank reserve requirements to boost flagging economy. And as China’s exports to the US fall, shipments to the rest of the world soar.

China hides ever more statistics from the world. Xi Jinping and Vladimir Putin hail close alliance. And the two leaders joint statement attacks AUKUS as provoking an arms race.

Notable/In depth ~

• Showing courage can slow “creeping authoritarianism” in the US, says Chinese human rights activist

• Decoupling would not only hurt the US economy, but also its national security, argues economist C. Fred Bergsten

• ‘Brain gain’ becoming a ‘brain drain’ with Trump’s assault on universities, writes former president of MIT

Trump touts “great progress;” talks to continue

“Great progress” was made on the first day of trade talks in Geneva, Switzerland, according to Trump, with the U.S. and China set to continue negotiations on Sunday.

Writing on his social media platform Truth Social, the U.S. president said “a total reset” in relations now looked possible, following ten hours of talks between Treasury Secretary Scott Bessent, U.S. Trade Representative Jamison Greer and a Chinese delegation led by Vice Premier He Lifeng.

“A very good meeting today with China, in Switzerland. Many things discussed, much agreed to. A total reset negotiated in a friendly, but constructive, manner,” Trump wrote. “We want to see, for the good of both China and the U.S., an opening up of China to American business. GREAT PROGRESS MADE!!!”

Despite Trump’s upbeat words, no one from the U.S. or Chinese delegations commented to reporters, as they left the residence of the Swiss ambassador to the U.N. where the talks were held, departing in convoys of black vehicles.

“Trump is convinced that the Chinese need us more than we need them. And I think the Chinese are equally convinced that we need them more than they need us,” cautions William Reinsch, a former U.S. trade official. “That’s not a view that gets you to a resolution very quickly.”

The meeting is an “important step in pushing toward a resolution” of the tariff impasse, the official Xinhua News Agency said in a commentary released Saturday.

No guarantee a trade deal “will stick”

My Thursday take on the U.S.-China trade talks:

“I've said this before, just because they meet, just because they start to bring down tariffs, even if they do do a trade deal and both sides tout it, that doesn't mean it's going to be a great trade deal. Doesn't mean both sides will get what they want and doesn't mean it'll stick. So there's a lot of uncertainty out there.”

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