On May 10, 2025, U.S. and Chinese officials convened in Geneva to address the escalating trade war that has unsettled global markets. The talks, involving U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng, mark the first formal negotiations since the imposition of steep tariffs—145% by the U.S. and 125% by China—earlier this year.

Investors are cautiously optimistic, hoping the discussions will lead to a de-escalation of tensions. While significant breakthroughs are not anticipated immediately, even modest progress is viewed positively. Recent signs, such as President Trump’s suggestion of lowering tariffs to 80%, have slightly improved market sentiment.

The ongoing trade dispute has had tangible economic impacts. China’s factory-gate prices fell by 2.7% year-on-year in April, the steepest drop in six months, indicating deepening deflationary pressures. Consumer prices also declined for the third consecutive month, reflecting weakened domestic demand amid the trade tensions.

The Geneva talks are expected to continue into Sunday, with both sides aiming to establish a framework for ongoing negotiations. Analysts emphasize that while a comprehensive solution is unlikely in the short term, sustained engagement could help stabilize economic outlooks.

Source: Reuters