What to expect from the commercial conversations of the US Rompehielos

Bets are high for The United States and China Rompehielos trade this weekend, since the result could restore the future of economic relations between the two largest economies in the world.

The United States Secretary of the United States, Scott Besent, and trade representative Jamieson Greer are scheduled to meet with the Chinese main economic representative and vice president of LIFENG in Switzerland on Saturday.

Analysts say that it is unlikely that an integral agreement will leave a single meeting, however, they expect a partial reversal of the very high tariffs to be on the table.

Both parties have been looking for a path for decallation, since the economic cost of tariffs has become increasingly difficult to ignore.

The US economy contracted 0.3% in the first quarter of this year amid the growing concerns that the economy will slide into a recession with greater inflation and unemployment. And while the Chinese economy grew by 5.4%better than expected in the first three months of this year, the main banks have reduced their growth forecasts throughout the year so that the country is around 4%, below the objective of the government of around 5%.

Trump could still have more to lose, since the Chinese political system gives the country’s leadership a “higher pain threshold” and a “greater degree of control over the support of macro policies in the short term,” said Dan Wang, director of China at the Firm of Political Risk Consulting Eurasia Group.

Vice President, it is the main mission will simply seek clarity about what Trump wants and evaluate if the United States intends to harm China’s interests, Wang said.

In what seemed to be a impulse of trust before the meeting, China published commercial data that showed that its exports increased 8.1% year after year in April in the back of a jump in shipments to the nations of Southeast Asia, ignoring the 21% drop in the US goods.

And on Friday, the Ministry of Commerce of China launched a “special operation” to combat smuggling of strategic minerals, including Galio, Germanio, Antimony, Tungsten and medium and heavy rare earths.

Without appointing specific entities, the Ministry framed the operation as “an offensive against entities abroad that had colluded with national illegal staff” to avoid the export control rules that had increased earlier this year.

“It serves as a useful reminder of the leverage that China possesses, since the negotiations are launched in Geneva,” said Stephen Olson, a senior visiting fellow at the Institute of Southeast Asian Studies and a former American commercial negotiator.

China is the largest world producer of several critical crucial minerals to make semiconductors, defense and clean energy equipment. As part of the retaliation measures against Trump rates announced last month, China has increased metal export controls.

“The most acute arrow that China has in its laugh to restrict the access of the United States to critical minerals that cannot easily obtain in another place,” said Olson.

On the Washington agenda, it is ensuring the elimination of China’s export restrictions on rare lands used to make magnets, Bloomberg reported on Friday, citing people familiar with the matter.

Another potential pressure point for Trump is the vast treasures of the United States of China, which could represent risks for the stability of the financial market, said Wu Xinbo, director of the American Studies Center of the University of Fudan.

Beijing is likely to cut its reserve of almost $ 800 billion of debt of the US government. If you want to increase Trump’s heat, Wu said.

Despite the market speculation that China could download their treasure holdings to return the rates, a significant sales sale could also be counterproductive. Such movement could strengthen Yuan, undermining China’s export competitiveness and leads to substantial losses in its assets called dollars.

According to analysts, a partial investment of tariffs is one of the most probable results of the meeting, according to analysts who remain divided into the extension of any adjustment and the rhythm of decalcalation.

Robin Xing, Chinese chief economist of Morgan Stanley, projects that the United States effective rates on Chinese products could be reduced from current 107% to a terminal rate of 45% by the end of the year.

Similarly, Tianden Xu, a senior economist of the Economist Intelligence Unit, hopes that the United States and China will climb their fees average mutual weighted fees of around 50% in the short term.

That is still high compared to tariff rates of 10.9% in Chinese products and 16% that China had imposed on US products before Trump returned to office, according to Xu estimates.

In recent days, senior US officials have sounded an optimistic tone about the next conversations, saying that they could relieve the commercial barriers that Trump raised last month.

“Descalado, carrying those rates where they could, where they should be, I think it is the goal of Scott Besent,” said Secretary of Commerce Howard Lutnick to CNBC Friday. “And that is what the president expects it to be a good result, it is a uncalled world in which we become and then work in a big problem.”

During a white house conference on the signing of a commercial agreement with Great Britain, Trump said about the Switzerland meeting: “I think we are going to have a good weekend with China.”

The president of the United States then said in a publication on the Truth Social Social Network Platform on Friday, that “80% of the Chinese rate seems correct! Even Scott B.”

Chinese officials, on the other hand, have reached a firmer tone, reiterating the country’s demand for the Trump administration to cancel all unilateral rates in China.

A spokesman for the Ministry of Commerce said Wednesday that “China will not sacrifice the principle to achieve [a] Try with us, “while repeating that Washington must” rectify your irregularity “by eliminating all unilateral rates.

During the next conversations, China could still offer some “sweeteners”, such as the promises of intensifying their repression against fentanyl flows, Xu said, which could lead to a short -term elimination of rates related to 20% of fentanil that Trump imposed.

Both parties have tried to mitigate the economic pain of exorbitant tariffs, exempting the encumbrances in a variety of goods, including consumer electronics, semiconductors and auto parts.

According to reports, China exempt import tariffs on selected pharmaceutical products, microchips and aircraft engines from the United States. He has also created a “white list” of American products that will be exempt from additional taxes, according to Reuters.

However, attempts to achieve a more comprehensive agreement, similar to the phase one agreement signed during Trump’s first mandate, will probably be “long and unproductive,” Xu said, since both parties have shown little appetite for the commitment of the respective strategic priorities and economic red lines.

“We severely doubt the possibility that the United States and China reach something close to the Commercial Agreement of Phase one reached in 2020, a model that has been discredited in the eyes of high US officials,” Xu added.

China had claimed that it fulfilled the terms under the commercial agreement of phase one that Trump hit Beijing during his first presidential mandate, while stating that the United States violated certain mandates in the agreement.

The agreement required that China boost the purchases of US goods at $ 200 billion for a period of two years, but Beijing did not meet the objectives such as Covid-19 pandemic.