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    White House claims China trade deal reached after ‘productive’ Geneva talks

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    The White House has announced that a trade deal with China has been struck after two days of talks in Geneva.The announcement on Sunday came after the US treasury secretary, Scott Bessent, told reporters that there had been “substantial progress” in talks between his team and that of the Chinese vice-premier, He Lifeng, in Geneva on defusing the trade war between the world’s two largest economies sparked by Donald Trump’s 145% tariffs.At a news conference later on Sunday, He, the top Chinese trade official, called the talks “candid” and said substantive progress had been made to reach an “important consensus”, according to China’s state-run media. The two sides will issue a joint statement agreed during the talks, the vice-premier said.In televised remarks that were posted on social media by the White House, Bessent said he would give more details on Monday, “but I can tell you that the talks were productive”.“I’m happy to report that we’ve made substantial progress between the United States and China in the very important trade talks,” Bessent told reporters.The US trade representative, Jamieson Greer, who spoke alongside Bessent, suggested more strongly that a deal had been reached.“It’s important to understand how quickly we were able to come to agreement, which reflects that perhaps the differences were not so large as maybe thought,” Greer said.“Just remember why we’re here in the first place,” he added. “The United States has a massive $1.2tn trade deficit, so the president declared a national emergency and imposed tariffs, and we’re confident that the deal we struck with our Chinese partners will help us to resolve, work toward resolving that national emergency.”Bessent said he had informed Trump of the progress of the talks.The meeting was the first face-to-face interaction between Bessent, Greer and He since the world’s two largest economies imposed tariffs well above 100% on each other’s goods.Although Bessent has said the bilateral tariffs were too high and needed to come down in a de-escalation move, he did not offer any details of reductions agreed and took no questions from reporters.On Saturday night, Trump wrote on his social media platform that the two sides were working on “a total reset … in a friendly, but constructive, manner.”“Many things discussed, much agreed to,” Trump posted. “We want to see, for the good of both China and the U.S., an opening up of China to American business. GREAT PROGRESS MADE!!!,” Trump added. Trump’s rhetoric, that China needs to be “opened” to US business seemed to ignore a half century of trade between the two nations since one of his political heroes, Richard Nixon, visited China in 1972.The US commerce secretary, Howard Lutnick, confirmed to CNN that the US will continue to keep “a 10% baseline tariff to be in place for the foreseeable future” even on imports from nations the US strikes new trade deals with.On Sunday, Kevin Hassett, the director of the National Economic Council, said: “What’s going to happen in all likelihood is that relationships are going to be rebooted. It looks like the Chinese are very very eager to play ball and renormalise things … they really want to rebuild a relationship that’s great for both of us.”Last week, Trump and the UK prime minister, Keir Starmer, announced a limited bilateral trade deal.Hassett said the UK agreement provided a “really exciting blueprint” and that he had been briefed on 24 deals with other countries that are in the works. “They all look a little bit like the UK deal but each one is bespoke,” he said.Meanwhile, Lutnick dismissed reports of dock workers and truckers losing their jobs as a result of the tariffs.“This is just a China problem right now,” Lutnick said. “The rest of the world is 10% [tariffs]. So don’t overdo it.”“Prices are going to stay stable once this policy is done,” Lutnick added.Reuters contributed reporting More

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      Trump’s tariffs may be perilous for small, heavily indebted countries in global south

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      “This is very messed up. If Trump wants Cambodia to import more American goods: look, we are just a very small country!”Khun Tharo works to promote human rights in the Cambodian garment sector, which employs about 1 million people – many of them women.“I think they are very concerned about their jobs, and I think they are very concerned about their monthly pay cheque. And that has significant effects on the livelihoods of their dependent family,” says Tharo, programme manager at the Centre for Alliance of Labor and Human Rights (CENTRAL), a Cambodian workers’ rights organisation.One of the most wilfully destructive aspects of Donald Trump’s shock and awe trade policy is the imposition of punitive tariffs on developing countries across Asia, including rates of 49% for Cambodia, 37% for Bangladesh, 48% for Laos.For decades Washington had championed economic development through trade. Now, at the same time as slashing overseas aid budgets and retreating from its role in supporting developing nations, it is ripping up that idea entirely.In its place, Trump intends to impose his will on the US’s trading partners. Some are all but powerless to exact concessions, given their small size, and dependence on the mighty American market. Cambodia hastily offered to cut tariffs on US goods on Friday, in a bid to propitiate Washington.Contrary to Trump’s bombast about the US being “pillaged”, the tariffs are not in any sense “reciprocal”.Instead, they relate to the size of the US goods trade deficit with each country, and the value of its exports. (Side note: the 10% paid by the UK has nothing to do with Labour’s negotiating flair – it just came out of the fact that Britain buys about as much stuff from the US as it sells the other way).Ironically, many of the countries in the global south hit by Trump had benefited from preferential schemes offering low or zero tariffs, precisely because building up exporting capacity is an accepted path to development.Alice Oyaro, the chief executive at the charity Transform Trade, which works with producers in some of the worst-hit countries, says: “Our biggest concern is that the additional costs are pushed down to those in the supply chain who are least able to pay. Small farmers exporting everything from green beans to cocoa, and women workers in Bangladeshi factories are already finding it hard to make ends meet. They will see their incomes squeezed even more.”Tiny Sri Lanka, which has an economy 0.3% of the size of the US’s, faces a 44% tariff despite being bailed out by the International Monetary Fund two years ago and continuing to negotiate debt restructuring deals with its creditors.“It’s a highly vulnerable situation,” says Ajith D Perera, the chair of the Asia Pacific Trade Agreement (APTA) Chamber of Commerce and Industry. “Sri Lanka will lose export income and see a hit to GDP and employment – and that comes at a time when it is just coming out of bankruptcy.”He fears the scale of the tariffs could compromise Sri Lanka’s ability to meet the conditions of the IMF bailout deal. Trade is meant to be a key prop for growth, as it rebuilds its shattered economy.“I think the fundamentals have been challenged by the US decision,” he says. “25% of Sri Lanka’s exports go to the US and 70% of that is garments. I think the government needs to start discussions with the IMF immediately.”As his warning suggests, there is a risk that a grim side-effect of Trump’s trade war will be to exacerbate the debt crises already hitting heavily indebted poorer nations.Even countries that have escaped the most punitive tariff rates could still be hit hard if the prospect of a global downturn depresses the value of the commodity exports on which many rely.Keir Starmer and other leaders of the developed world have been preoccupied with their own domestic responses since Wednesday’s bombshell briefing in the White House Rose Garden.But the severity of the probable impact for the global south calls for a concerted approach, too – albeit one that will have to bypassWashington.Most of the hardest-hit countries can already trade tariff-free with major markets under projects such as the EU’s Everything But Arms programme and the UK’s Developing Countries Trading Scheme, which are designed to help the poorest nations to develop through trade.But if Trump’s tariffs stick, multinational brands focused on the US are likely to switch production rapidly to countries hit with lower rates. One garment buyer in India told me on Friday she was already hearing of factory owners in Bangladesh being told by US brands that they would now be manufacturing their sweaters in Peru, which has a rate of just 10%.The social dislocation in some of these hardest-hit economies could be profound, if such rapid shifts result in mass layoffs.And the case for debt write-offs, already clear, may become all the more pressing, if the resulting the looming global downturn sweeps vulnerable countries over the edge.The fact that the British government’s deep cuts to the aid budget now sit alongside a probable global economic downturn and heavy US penalties for exporters in developing countries makes that decision all the more shameful.Back in Cambodia, Tharo says: “The industry right now seems to be in a little bit of a hectic situation. The government is also extremely worried because they are not seeing any alternative markets at the moment. And we don’t have significant goods to be exported to any other country.“Trump doesn’t care,” he sighs. More

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      If Trump’s tariffs start a trade war, it would be an economic disaster | Mark Weisbrot

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      “To me, the most beautiful word in the dictionary is tariff, and it’s my favorite word,” said Donald Trump last month. Pundits, politicians and financial markets are trying to figure out why, since he announced a week ago that he would impose tariffs on the United States’s three biggest trading partners: 25% for Mexico and Canada, and 10% for China.One theory is that tariffs can be a beautiful distraction. Trump, more than any previous US president, has fed on distractions for years, both to campaign and to govern. He can move seamlessly from one distraction to the next, like a magician preparing for the opportune moment to pull a coin from where it appears to have been hidden behind your ear.Although he still has seven weeks before he takes office, he could use a distraction that can start sooner. He has run into problems with cabinet and other appointments that require Senate confirmation. Of course he could easily find people who would do his bidding and be acceptable to a Senate with a Republican majority. But that would defeat the main purpose of nominating people who seem indefensible: to force Republican senators to display the abject subservience that Trump needs to be public, in order to ensure his unwavering dominance within his party.This is no small part of his governing strategy; it involves a big takeaway from the failures of his first term, from his point of view. The lesson is: loyalty to Trump first. Violators will be banished. And with small margins in the Senate and the House, things could begin to unravel if this core imperative goes unenforced.But the days before Trump actually takes office could also be the best time for him to use the threat of tariffs to begin bullying foreign governments for things that might benefit his allies, donors or himself. Other governments besides the three that he named are trying to figure out what they can offer Trump to avoid the economic disruption of tariffs. Christine Lagarde, the head of the European Central Bank, who does not see Trump as a friend, has urged the EU to negotiate with him, rather than adopt a retaliatory, eg tariff, response.Trump’s two offered pretexts for the tariff threat – migration and drugs, in this case fentanyl – are not credible. About 18% of the undocumented people encountered by border patrol over the past year have been from Venezuela and Cuba, two countries that have been devastated economically by sanctions imposed by the US government. If reducing immigration were really Trump’s concern, he would not have deployed sanctions that have driven millions of people from their homes to the US border; and he could end these sanctions in January by himself.Broad economic sanctions are a form of economic violence which targets civilians in order to achieve political ends, including regime change. US congressman Jim McGovern, a Massachusetts Democrat, made this clear in a letter that he wrote to Joe Biden asking for the sanctions on Venezuela to be dropped. The Trump sanctions in Venezuela in 2017 killed tens of thousands of civilians during the first year, and many more in the years that followed, including under Biden.As for fentanyl, about 75,000 people died from overdoses of this drug in 2023. But it’s difficult to see how Trump’s tariffs could help solve this problem. It’s a glaring example of how more than four decades of a failed “war on drugs”, based on criminalization of use and supply-side intervention, have made things worse. In this case the drug war has led to an innovation – fentanyl – that is vastly more powerful than heroin, much cheaper to produce, more addictive and easier to transport, distribute and produce.There is general agreement in the economic research on the effects of Trump’s trade and tariff wars in his first term as president, in which he placed tariffs on about $380bn of US imports. The overall impact on living standards for US workers and most Americans is found to be negative, with the cost of the tariffs being absorbed by US consumers. Employment overall did not increase, and may have fallen due to the negative impact of retaliatory tariffs.The economic research looking at the expected impacts of tariffs that Trump has talked about going forward also finds the impact on the US economy to be negative. And there is potential for much more damage if other countries respond with more retaliatory tariffs than they did in 2018-2020.Meanwhile, the productivity of Trump’s tariff offensive in generating distractions remains high. On Sunday he took a shot at the so-called Brics countries – Brazil, Russia, India, China and other economic powers: “We require a commitment from these countries,” Trump wrote on Truth Social, “that they will neither create a new Brics currency nor back any other currency to replace the mighty US dollar or they will face 100% tariffs and should expect to say goodbye to selling into the wonderful US economy.”None of these things will happen while Trump is in office. Nor will threats like this deter the majority of the world, when it is ready, from replacing a system of global governance that is overwhelmingly run by one country with help from the richest people in other rich countries. Our current system is one in which the “exorbitant privilege” that the dollar-based financial system bestows upon the US government gives the president the power to destroy whole economies with the stroke of a pen.But this is a longer story; for Trump it’s just another threat and another distraction in the post-truth world that he, as much as anyone, helped create. But he will need more than distractions to take this country further down the road toward de-democratization, which is what brought to him and his party the power that they now have.

      Mark Weisbrot is co-director of the Center for Economic and Policy Research. He is the author of Failed: What the “Experts” Got Wrong About the Global Economy More