US, China to hold ice-breaker trade talks in Geneva on Saturday

WASHINGTON/BEIJING, May 7 (Reuters) – U.S. Treasury Secretary Scott Bessent and chief trade negotiator Jamieson Greer will meet China’s economic tsar He Lifeng in Switzerland this weekend for talks that could be the first step toward resolving a trade war disrupting the global economy.

News of the meeting announced by Washington late Tuesday, and later confirmed by Beijing, sent U.S. equity index futures sharply higher, while stock markets in China and Hong Kong also rose as Asian trading began on Wednesday.

The talks come after weeks of escalating tensions that have seen duties on goods imports between the world’s two largest economies soar well beyond 100%, amounting to what Bessent on Tuesday described as the equivalent of a trade embargo.

The deadlock, alongside U.S. President Donald Trump’s decision last month to impose sweeping duties on dozens of countries, has upended supply chains, roiled financial markets and stoked fears of a sharp downturn in global growth.

The negotiating teams convening in neutral Switzerland are expected to discuss reductions to the broader tariffs, two sources familiar with the planning told Reuters. The two sides are also expected to discuss eliminating duties on specific products, a U.S. decision to end its so-called de minimis duty exemptions on low-value imports and U.S. export controls, one of the sources said.

China’s State Council did not immediately reply to a faxed request for comment.

“My sense is this will be about de-escalation,” Bessent told Fox News Channel’s “The Ingraham Angle” after the announcement. “We’ve got to de-escalate before we can move forward.”

A Chinese commerce ministry spokesperson later confirmed that China had agreed to meet the U.S. envoys.

“On the basis of fully considering global expectations, China’s interests, and the appeals of U.S. industry and consumers, China has decided to re-engage the U.S.,” the Chinese statement said.

“There is an old Chinese saying: Listen to what is said, and watch what is done. … If (the U.S.) says one thing but then does another, or attempts to use talks as a cover to continue coercion and blackmail, China will never agree.”

This is the first meeting between senior Chinese and U.S. officials since U.S. Senator Steve Daines met Premier Li Qiang in Beijing in March.

As tensions with the United States ratcheted up, Beijing has largely adopted a fiery rhetoric, repeatedly refusing to negotiate with Washington unless it withdrew its “unilateral” tariffs.

However, on Friday last week it signaled increasing openness with its commerce ministry saying Beijing was “evaluating” an offer from Washington to hold talks.

The stakes for China’s economy are high, with its vast factory sector already facing the brunt of the tariffs. Many analysts have downgraded their 2025 economic growth forecast for the Asian giant, while investment bank Nomura has warned the trade war could cost China up to 16 million jobs.

China’s central bank on Wednesday ramped up monetary stimulus, flagging rate cuts and a liquidity injection into the banking system, among other easing measures aimed at mitigating the economic impact of the duties.

Bessent told Fox News the two sides would work out during their meeting on Saturday “what to talk about.”

“Look, we have a shared interest that this isn’t sustainable,” Bessent said. “And 145%, 125% is the equivalent of an embargo. We don’t want to decouple. What we want is fair trade.”

Bo Zhengyuan, partner at Shanghai-based policy consultancy Plenum, said Saturday’s talks are aimed at easing tensions but it remains unclear how substantive they could prove.

“For more comprehensive geopolitical negotiations to be possible, tariffs would need to be lowered first – the key is whether both sides can agree on the extent and scope of tariff rollbacks, as well as on follow-up talks,” Bo said.

U.S. officials have held a flurry of meetings with trading partners since the president announced a 10% tariff on most countries on April 2, along with higher tariff rates that will kick in on July 9, barring separate trade agreements.

Trump has also imposed 25% tariffs on autos, steel and aluminum, 25% tariffs on Canada and Mexico, and 145% tariffs on China, with further duties expected on pharmaceuticals in coming weeks.

China responded by boosting its tariffs on U.S. goods to 125%. The European Union is also readying countermeasures.

Trump and his trade team have sent mixed signals over progress in talks with major trading partners rushing to cement agreements with Washington and avoid the imposition of hefty import taxes on their goods.

Bessent told lawmakers earlier in the day that the Trump administration was negotiating with 17 major trading partners, but not yet China, and could announce trade agreements with some of them as early as this week.

Trump told reporters before a meeting with Canadian Prime Minister Mark Carney that he and top administration officials will review potential trade deals over the next two weeks to decide which ones to accept, triggering a slide in stocks.

U.S. and Britain have made progress towards a trade deal, a British official said, while Bessent told Fox News that many other countries including Indonesia had come with good offers to reduce tariffs and non-tariff barriers, such as subsidies.

Trump’s moves on tariffs, which he says are aimed in part at reducing the U.S. trade deficit, are so far having an opposite effect, with the gap hitting a record in March as businesses rushed to import goods ahead of the levies. The data highlighted a dynamic that helped drive gross domestic product into negative territory in the first quarter of 2025 for the first time in three years.

In particular, an effort by drug makers to beat tariffs that Trump has threatened to impose on the sector led to a record surge in pharmaceutical imports. Notably, though, the U.S. trade deficit with China narrowed sharply as the crushing levies Trump has imposed cut deeply into Chinese imports.