Trump secures important trade victory against China

Trump secures important trade victory against China

President Donald Trump's shocking and impressive approach to tariffs threatened to destabilize the global financial system and plunge the U.S. economy into recession. Concerned about the prospect of empty store shelves and renewed inflation, Trump sent his level-headed and professional negotiators to Geneva to secure a victory.

Dramatic de-escalation with China

The unexpected one dramatic de-escalation in the trade conflict with China laid the foundation for a growing series of trade negotiations that could potentially produce a series of expeditious, if less comprehensive, bilateral agreements aimed at reducing the U.S. trade deficit.

A new beginning with China

“We actually have a fresh start with China,” Kevin Hassett, director of the National Economic Council, said in an interview on CNN News Central. “That’s the perspective we should have on these negotiations.” The decision by both the United States and China to reduce exorbitant tariffs by 115 percentage points at the end of two days of talks marked the most significant development in a politics that has been at times maximalist and chaotic. The virtual trade embargo between the world's two largest economies had created economic pressures at both the national and global levels that appeared to be at a tipping point.

Markets react positively

The de-escalation caused markets to rise worldwide, as it provided insight into a Trump administration strategy that insisted on significantly higher tariffs while encouraging its largest trading partners to negotiate with offers.

Serious negotiators dispatched

Trump dispatched senior negotiators with Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer, who were described by market participants and their Chinese counterparts as serious, prudent and empowered be perceived.

With intensive negotiations now beginning, the ongoing attempt to reach agreements with around two dozen other countries has received a boost with a small but important deal with the United Kingdom. This represented a model for what Trump wanted in the urgent search for tailored agreements with the US, according to several foreign diplomats involved in the bilateral talks.

Positive signals from the negotiation round

Trump's advisors see the negotiators and the clear framework conditions for the negotiations as tangible positive signs. Whether they lead to a substantial result remains an open question. As one adviser put it on CNN: “This is a lot better than the alternative we both faced.”

"This is really the first time we've seen a clear path to getting this plane to land without a catastrophic economic disaster," a Republican senator told CNN. “That doesn’t mean we’re going to make it, but this is a lot better than where we were before.”

A complex path to stability

The path from the market panic announcement of the tariff increase on April 2nd to this point has been anything but linear. Despite ample evidence to the contrary, Trump's advisers have long insisted that it was a strategic roadmap that took every possibility into account.

The untenability of this claim is highlighted by Trump’s own view that “flexibility” is paramount. In private conversations, Bessent repeatedly emphasizes the value of the “strategic uncertainty” created by Trump’s approach.

After all, it was Trump who hit the pause button on his most drastic "reciprocal" tariffs for around 100 countries and who was the first to publicly suggest a significant de-escalation with China after his team had considered even more drastic deviations from the previously proposed strategy in internal discussions.

Strategy for future negotiations

Still, officials say there is a comprehensive strategy aimed at moving trading partners to where the administration is now.

The new reality

In the end, the Trump administration managed to enshrine dramatically higher tariffs - a universal rate of 10% worldwide and sector tariffs that remain largely untouched. Even though it is clear that tariffs will not go to zero, trading partners are still lining up to strike a deal with the United States.

The fact that both lawmakers and foreign diplomats seem willing to overlook - or even openly accept - that a 10% global tariff rate is now effectively a non-negotiable reality provides insight into the snapshot into which Trump has led the world.

Trump's team explained that the strategy to achieve a "victory" even from significant remaining tariffs was the approach from the start.

“We had a plan, we set a process in motion and now we have a mechanism with the Chinese for future talks,” Bessent told reporters in Geneva.

Trading as the key to success

From the start, the talks with China were the most difficult, labor-intensive and time-consuming. The lessons from Trump's first negotiations are deeply internalized not only by his advisors, but also by Trump himself. For Trump, trade is the be-all and end-all. That includes the India-Pakistan ceasefire agreement, which he told reporters was driven primarily by his promises of rapid trade gains for both nations.

It seemed fitting that the sharpest observation in the rush to analyze the dramatic de-escalation in U.S.-China trade relations came from the man who had pushed the situation to the brink, albeit in a completely different but no less significant context.

“People have never used trade the way I use it,” Trump told reporters Monday morning.

This reporting was assisted by CNN's Jeff Zeleny.