China and the United States will hold consultations on trade issues in Switzerland

The Trump administration announced on the evening of May 6 (Beijing time on the morning of May 7) that U.S. Treasury Secretary Benson and U.S. Trade Representative (USTR) Representative Greer will visit Switzerland this week to hold consultations on trade issues with China. This will be the first formal consultation between China and the United States after the two countries imposed tariffs on each other.

The outside world is concerned about whether this meeting can bring a turnaround to ease the escalating retaliatory measures of both sides.

According to the U.S. Treasury Department, Benson will visit Switzerland and meet with Chinese representatives from May 8. The U.S. Trade Representative’s Office also announced that Greer will visit Geneva, Switzerland in the second half of this week to “consult on trade issues” with China.

The Chinese Ministry of Foreign Affairs also announced on May 7 that Vice Premier He Lifeng, who is in charge of economic policy, will visit Switzerland from the 9th to the 12th and hold talks with Benson.

In an interview with Fox News on the evening of the 6th, Benson revealed that he would hold talks with China on the 10th and 11th. He said: “This will be a meeting to ease tensions,” and expected that the two sides would reach a consensus on future consultation topics.

Bessant also said, “We do not want to decouple from China in (non-strategic) areas such as textiles. We want to decouple from strategic industries,” and listed industries such as steel, pharmaceuticals and semiconductors.

The Chinese Ministry of Commerce said in a spokesperson’s speech: “On the basis of fully considering global expectations, Chinese interests, and the calls of the US industry and consumers, China has decided to agree to engage with the US side,” while emphasizing that “any dialogue and negotiation must be carried out on the premise of mutual respect, equal consultation, and mutual benefit,” and stated that “no principled position or international fairness and justice will be sacrificed to seek any agreement.”

After launching a series of “Trump tariffs,” the United States put pressure on China to participate in the consultations. The Chinese side expressed its attitude of not accepting consultations before the United States canceled the relevant tariffs, and the confrontation between the two sides lasted until the end of April.

It was not until early May that the two sides began to show their willingness to negotiate. U.S. Secretary of State Rubio said in an interview with Fox News on May 1 that the U.S. and China are expected to start consultations soon. On the following 2 days, China’s Ministry of Commerce expressed its first contact with the U.S. side.

The background that prompted the U.S. and China to start consultations is that the impact of tariffs of more than 100% on companies and consumers in both countries is becoming increasingly severe and cannot be ignored.

Johnson & Johnson, a large American pharmaceutical and medical device company, expects its annual costs to increase by $400 million due to retaliatory tariffs from China. Honeywell, a large American air conditioning equipment manufacturer, also faces additional expenses of up to $500 million.

Consumers are also beginning to feel the pressure. Mattel, a large American toy company, said that the company will raise prices due to tariffs on goods imported from China.

In addition, the Trump administration canceled the tariff exemption for small goods imported from mainland China and Hong Kong with a price of less than $800 from May 2, which also caused consumer concerns. American consumers used to buy clothing and other goods at low prices through Chinese e-commerce platforms such as “Temu” and “Shein”, but shipments from China have been suspended.

It is also difficult for China to get out of this unscathed. According to data from the International Monetary Fund (IMF), China’s economic growth rate will be reduced by 1.3 percentage points in 2025 due to tariffs, 0.4 percentage points higher than that of the United States.

The April manufacturing purchasing managers’ index (PMI) released by the National Bureau of Statistics of China fell below the boom-bust line of 50 again in three months, reflecting that due to the impact of “Trump tariffs”, uncertainty has increased and companies have begun to reduce production and orders.

Bessant once said that the state of high tariffs between China and the United States is “essentially an embargo”, and reiterated in an interview on May 6 that “this is unsustainable.”

Against the backdrop of continued market pressure, whether the two leaders can reach a consensus on stopping the trade war as soon as possible through the rapid advancement of ministerial consultations has become the focus in the future.