What signals does the joint statement of the Sino-US Geneva Economic and Trade Talks have been released?

Source: Wall Street News

On May 12, China and the United States issued a joint statement on the economic and trade talks in Geneva. A spokesperson for the Ministry of Commerce said that the high-level China-US economic and trade talks have made substantial progress and significantly reduced the bilateral tariff level. This measure meets the expectations of producers and consumers in both countries and is in line with the interests of both countries and the common interests of the world. Experts interviewed by the Global Times said that the talks have achieved substantial results, which is better than expected. However, a cautious and optimistic attitude should still be maintained, and China and the United States will continue to conduct negotiations on tariffs.

According to the official website of the Ministry of Commerce, the US side promised to cancel a total of 91% of the tariffs imposed on Chinese goods under Executive Order 14259 of April 8, 2025, and Executive Order 14266 of April 9, 2025. It will modify the 34% reciprocal tariffs imposed on Chinese goods by Executive Order 14257 of April 2, 2025. Among them, the 24% tariff will be suspended for 90 days, and the remaining 10% tariff will be retained. Correspondingly, China will cancel a total of 91% of the counter-tariffs imposed on US goods; for the 34% counter-tariffs against the US reciprocal tariffs, 24% of the tariffs will be suspended for 90 days, and the remaining 10% of the tariffs will be retained. China will also correspondingly suspend or cancel the non-tariff counter-measures against the US. The two sides unanimously agreed to establish a China-US economic and trade consultation mechanism, maintain close communication on their respective concerns in the economic and trade field, and carry out further consultations.

Song Guoyou, Deputy Director of the Center for American Studies at Fudan University, said in an interview with the Global Times on the 12th that judging from the statement, the results of the talks exceeded expectations and were "substantial" achievements, reflecting the positive effects of China's previous countermeasures against the US. The tariffs have been greatly reduced compared with before. In fact, the US only imposes a benchmark tariff of 10% on China, which is similar to that on most countries, which is conducive to the normalization of China-US trade. However, the US still retains the unfair unilateral tariffs on China, which need to be addressed in the subsequent China-US talks.

"The results of the talks announced in the statement are better than market expectations." Huang Zhengliang, Director of the Research Center for New Industrialization of the Institute of Industrial Economics of the International Economic and Technological Cooperation Center of the Ministry of Industry and Information Technology, told the Global Times on the 12th that in the first round of China-US negotiations, the tariffs have been significantly reduced, and a consultation mechanism has been reached between the two sides. The results are obviously higher than market expectations. Huang Zhengliang particularly mentioned that the US side is under more pressure than the Chinese side. In mid-May, the US will announce a number of economic indices such as consumer prices, manufacturing, and import prices. Coupled with the consumption of US product inventories, the high tariffs have increased the pressure on the US economy. The US needs to reduce tariffs in a timely manner, restore trade, and relieve the pressure on economic development and commodity inventories.

However, some scholars have also reminded that a cautious and optimistic attitude should be taken. Gao Lingyun, a researcher at the Institute of World Economics and Politics of the Chinese Academy of Social Sciences, told the Global Times on the 12th that currently, tariffs are still a major burden for enterprises and consumers. Fortunately, the two sides have agreed to establish an economic and trade consultation mechanism, and follow-up negotiations can continue.

Yang Shuiqing, a scholar from the Chinese Academy of Social Sciences, told the Global Times that the medium- and long-term risk of industry tariffs cannot be ignored. The US government is conducting "Section 232 investigations" on semiconductors, pharmaceuticals, automobiles, critical minerals, etc. These industries are strategic industries, and their tariffs may increase.

How will the China-US economic and trade consultations develop next? Huang Zhengliang analyzed that first, China and the US will continue to conduct negotiations on tariffs in the next step. Second, the focus of the China-US negotiations will shift to non-tariff barriers. China and the US will launch negotiations on investment, market access, and the supply of critical minerals. Finally, considering the significant reduction of US tariffs on China, China's foreign trade is expected to have a more positive performance in May.

The statement said that the two sides will establish a mechanism to continue consultations on economic and trade relations. The consultations can be held in China, the United States, or a third country agreed upon by both sides. As needed, the two sides can conduct working-level consultations on relevant economic and trade issues.

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