Wary investors hope US-China talks cool high-stakes trade war
- Investors are hopeful that U.S.-China trade talks will cool a trade war between the world's two largest economies and dispel some of the uncertainty clouding financial markets, though few expect a major breakthrough just yet.
U.S. Treasury Secretary Scott Bessent said on Sunday that there had been "substantial progress" in two days of talks between his team and that of Chinese Vice Premier He Lifeng in the Swiss city of Geneva on defusing the standoff. But he offered no details of an agreement reached. Bessent said he would give more specifics on Monday, while U.S. Trade Representative Jamieson Greer, also at the talks, said the differences between the two sides were not as great as previously thought. "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 meeting in Switzerland could mark one of the biggest developments since U.S. President Donald Trump launched sweeping tariffs on April 2, which threw the global trade landscape into chaos and set off extreme market volatility. "This is the mother of all negotiations," said Alejo Czerwonko, chief investment officer, Emerging Markets Americas, at UBS. "There are hundreds of billions of dollars of trade on the line, a 145% tariff on Chinese exports that amounts to some sort of de facto embargo and grievances that extend well beyond trade." U.S. President Donald Trump said late on Saturday after the first day of talks that the two countries had negotiated "a total reset ... in a friendly, but constructive, manner."Recently, investors have expressed optimism that the worst-case trade scenarios would not come to pass, and pointed to signs of de-escalation between the U.S. and China as a reason behind a rebound in equities. But despite comments by Trump ahead of the talks suggesting a lower level of Chinese tariffs, and a trade deal announced on Thursday between the U.S. and Britain, many market participants said they were not expecting major breakthroughs in the talks. "We're still doubtful that direct U.S.-China negotiations will lead to a 'grand compromise'," said Thierry Wizman, global FX and rates strategist at Macquarie, in a note to clients. US Commerce Secretary Lutnick says China talks aimed at lowering trade tensionsTax the rich? Slash spending? Republicans wrestle with economic priorities in the Trump eraWe are fully prepared to respond to any aggression: Khawaja Asif
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