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US and China begin 2nd day of tariff talks. - AP News

AinvestSunday, May 11, 2025 5:55 am ET
2min read

US and China begin 2nd day of tariff talks. - AP News

US and Chinese delegations are set to resume talks over tariffs on Sunday, following a day of prolonged negotiations that ended Saturday without immediate signs of progress. The talks, which took place in Geneva, Switzerland, aim to de-escalate trade tensions between the world's two largest economies, which have been roiled by the U.S.-China standoff.

The first day of talks, which lasted over 10 hours, saw U.S. Secretary of Treasury Scott Bessent and Chinese Vice Premier He Lifeng engage in sensitive discussions. While neither side made public comments on the way out, prospects for a major breakthrough appear dim. However, there is hope that the two countries will scale back the massive tariffs they have imposed on each other's goods, a move that would relieve global financial markets and companies on both sides of the Pacific Ocean that depend on U.S.-China trade.

U.S. President Donald Trump, who has been aggressively using tariffs as his favorite economic weapon, raised U.S. tariffs on China to a combined 145% last month. China retaliated with a 125% levy, essentially amounting to a boycott of each other's products and disrupting trade that topped $660 billion last year. Even before the talks began, Trump suggested that the U.S. could lower its tariffs on China, stating that an 80% tariff seems right.

The talks come at a time when the U.S. and China are also grappling with other trade disputes, including issues related to China's tech policy and the flow of synthetic opioids like fentanyl into the United States. The Phase One agreement reached in 2020, which was meant to address these issues, has not been fully implemented due to disruptions caused by COVID-19.

The automotive sector is also feeling the impact of these tariffs. Ford Motor Co. and General Motors (GM) are both navigating the financial challenges posed by new tariffs imposed by the U.S. government. Ford estimates an additional $2.5 billion in expenses by 2025, while GM anticipates facing even greater financial pressures, estimating an increase in costs between $4 billion and $5 billion. Analysts warn of a potential decline in U.S. auto sales by over 1 million vehicles annually if the tariffs remain in place.

Chinese exports to the U.S. plunged in April, with shipments of goods from China to the U.S. dropping 21% compared to the same period one year earlier. This decrease is attributed to the steep tariffs imposed by the U.S. on Chinese goods. In contrast, Chinese exports to Southeast Asian countries surged by the same amount, demonstrating how the tariffs are upending trade patterns.

As the talks resume, both sides are under pressure to find a solution that can stabilize world markets and ease the burden on businesses and consumers. The outcome of these negotiations will have significant implications for the global economy and the future of U.S.-China trade relations.

References:
[1] https://www.cnbc.com/2025/05/10/us-china-tariff-talks-to-continue-sunday-official-tells-the-ap.html
[2] https://tokenist.com/ford-faces-1-billion-tariff-challenge-raises-prices-on-mexican-models/
[3] https://www.cbsnews.com/news/us-tariffs-chinese-exports-plunge/
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