Investors and others tracking the U.S.-China trade fight may want to brace for only limited progress
Can the Trump team and Beijing make progress on a trade deal? Here, a worker is shown at a factory in the Chinese city of Yiwu that makes patriotic American items for export to the U.S. market.
Analysts are cheering the news that U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer plan to meet this weekend with their Chinese counterparts in Geneva, Switzerland — but at the same time they’re cautioning that investors and others tracking the U.S.-China trade fight should expect only limited progress.
Bigger developments are more likely to come when U.S. President Donald Trump and Chinese President Xi Jinping get involved.
“Expectations for the Geneva meeting should be modest. These talks are just the first step in what could be a long and difficult process to reach a broader U.S.-China deal. Trump and Xi both dominate decision-making in their respective administrations and any major trade pact would likely require a leader-to-leader meeting,” Neil Thomas, a fellow at the Asia Society Policy Institute’s Center for China Analysis, told MarketWatch in an email.
The likeliest outcome is a symbolic tariff reduction by both sides that leaves substantial levies in place but shows goodwill and generates momentum for further negotiations, according to Thomas. He added that the best-case scenario probably would be a pause on all of Trump’s April 2 “liberation day” tariffs and of China’s retaliatory tariffs that is designed to enable broader bilateral negotiations. The worst-case scenario would be no movement on tariffs and no commitments to keep talking.
One key is that neither Trump nor Xi should be set up for a situation where either one feels like he’s losing face, according to Derek Scissors, a senior fellow at the American Enterprise Institute, a conservative think tank.
“The talks are led by the right people in Bessent and He Lifeng,” Scissors told MarketWatch in an email, referring to China’s vice premier. “But their bosses, Trump and Xi Jinping, are very prickly. The key part isn’t the substance, which is obvious — bring tariffs down. The key is both leaders have to feel assured they won’t be embarrassed.”
Bessent himself told Fox News late Monday that he expects the upcoming meeting with Chinese officials will be more about de-escalation than a big trade deal. “We’ve got to de-escalate before we can move forward,” he said.
In testimony before a House committee on Tuesday morning, Bessent indicated that the talks are preliminary, after Democratic Rep. Nydia Velázquez of New York asked if they could be viewed as “advanced negotiations.”
“On Saturday, we will begin, which I believe is the opposite of advanced,” the Treasury chief told Velázquez.
The congresswoman also pressed Bessent on whether Trump adviser Peter Navarro — known for his embrace of tariffs and hawkish stance toward China — would be among the U.S. officials going to Switzerland.
“He will not be joining us in Geneva,” Bessent told her.
“Thank God for that,” Velázquez said in response.
