Analysts say US skepticism about communist China stems from Beijing’s promising history of reform, but did not realize them.
The agreement reached by the US and China effectively suspends the battle for trade between the two biggest economies in the world, but analysts say there is little to resolve the fundamental differences.
Following the two-day negotiated marathon in Geneva, the US and China issued a joint statement on May 12, reversing the massive tariffs they recently imposed on each other.
Washington will reduce tariffs on Chinese imports from 145% to 30%, while Beijing will reduce tariffs from 125% to 10%. The contract is a temporary 90 days and provides more time for trade officials from both countries to negotiate.
The suspension will take effect on May 14th. The joint statement establishes a mechanism for continuing discussion of economic and trade issues between the US and China. The US will be led by Treasury Secretary Scott Bescent and US trade representative Jamieson Greer, while the Chinese team will be led by his Lifeeng, the Chinese economic emperor.
US stocks, dollars and oil prices all rose sharply on May 12th after the announcement of a 90-day truce.
Analysts offer a more tempered response, suggesting that tough negotiations will come first after temporary tariffs have been suspended.
“The negotiations go into the deep sea,” Taiwan-based commentator tracking the Chinese economy, Edward Hwang told the Chinese version of the Epoch Times on May 12.
China would expect the US to eliminate all mutual tariffs, but for the US, such tariff cuts are likely to require substantial plans from Beijing.
The 30% tariffs the Trump administration currently places on Chinese goods include a 20% collection previously imposed to put pressure on Beijing, to reduce fentanyl flow to the United States. The additional 10% tax is the baseline rate the White House imposed on its trading partners in early April.
China’s state media also suggests that challenges lie ahead in negotiating a comprehensive trade contract.
State-run Xinhua said in a commentary released shortly after it announced tariff cuts, it warned that there was a problem between the two countries and that it had warned of “realistic expectations.”
Additionally, some Chinese observers pointed to US skepticism about communist China due to Beijing’s promising history of change.
“The US-China talks have reached an era of deadlock as the US no longer trusts China’s promises,” Wang Guo-Chen, an expert at Chung-Hua Economic Research, a Taipei-based think tank, told the Epoch Times.
He pointed to the lack of progress in implementing the commitments outlined in the 2020 trade agreement that the Chinese administration signed with the first Trump administration. From protecting US intellectual property rights to increasing purchases of US products, “China has not met that promise,” Wang said, but trade negotiations between the US and China continued in Geneva on May 11.
The agreement, known as the Phase 1 contract, contained a commitment to halt Beijing’s forced technology transfer and implement structural reforms related to trade secrets, patents and pharmaceutical intellectual property.
It follows a 2018 survey by US Trade Representatives (USTR), which discovered that Beijing is putting pressure on foreign companies to partner with domestic companies and using other unfair methods to acquire cutting-edge technology and know-how in exchange for access to the Chinese market. The US has since imposed additional tariffs on billions of imports from China.
In its latest annual assessment released in April, USTR said China lacked the many commitments it has made to enhance intellectual property protection under the Phase One Trade Agreement.
Luo Ya contributed to this report.
