Inside the Surprise U.S.-China Trade Deal

Summary

Inside the Surprise U.S.-China Trade Deal: A Comprehensive Summary

Published on May 13, 2025

Hosts: Ryan Knutson and Jessica Mendoza
Produced by: The Wall Street Journal & Gimlet, Spotify

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1. Introduction: A Tumultuous Trade Landscape

In the episode titled "Inside the Surprise U.S.-China Trade Deal" from The Journal, hosts Ryan Knutson and Jessica Mendoza delve deep into the unexpected détente between the United States and China amidst an intense trade war. This episode provides an in-depth analysis of the negotiations, the key players involved, and the broader implications for global markets and future international trade relations.

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2. Brian Schwartz’s High-Stakes Reporting from Geneva

The narrative is anchored by the on-the-ground reporting of Brian Schwartz, an economic policy correspondent for The Wall Street Journal. Brian recounts his whirlwind trip to Geneva, Switzerland, where crucial trade negotiations were unfolding between the U.S. and China.

Brian Schwartz [00:08]: "It was wild. It was a crazy few days. We landed on a Friday and it just carried in for 72 hours of pure nonstop work. We did not stop working. It was nuts."

Despite the high level of secrecy surrounding the meetings, Brian took proactive steps to uncover the developments. Determined to gain firsthand insights, he discreetly followed U.S. Treasury Secretary Scott Besant and his entourage to the negotiations.

Brian Schwartz [02:02]: "I decided to follow them there. So I ran to a taxi... Get out of the car."

This bold move led him to a private estate where the U.S. delegation was negotiating a temporary truce in the ongoing trade conflict.

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3. Key Figures: Scott Besant and Jameson Greer

At the heart of the negotiations were two pivotal figures:

• Scott Besant, U.S. Treasury Secretary: Described as the cornerstone of the negotiations, Besant's leadership was instrumental in brokering the deal.

  Brian Schwartz [04:15]: "He has been critical for this. And to tell you the truth, if it wasn't for Scott Benson leading the way, I don't know if this would have happened."

• Jameson Greer, U.S. Trade Representative: Serving as Besant's close ally, Greer complemented Besant's approach, creating a formidable team that the Chinese delegation found both reassuring and effective.

Brian Schwartz [06:56]: "They are thick as thieves. I mean, they are clearly very close. ... Scott Bessant is the leader in a way because he's more senior from Wall Street."

Their collaborative dynamic, likened to "Batman and Robin," played a crucial role in navigating the complexities of the trade negotiations.

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4. Unveiling the Trade Deal: Key Terms and Provisions

The culmination of the weekend's negotiations was a temporary truce, marking a significant shift in U.S.-China trade relations. The deal primarily involved a reduction in tariffs and a pause in escalating trade tensions.

Tariff Adjustments

• United States to China:

  • Baseline Tariffs: Reduced from a staggering 145% to 10% on Chinese imports.
  • Fentanyl-Related Tariffs: Maintained an additional 20% tariff linked to concerns over fentanyl distribution.

  Brian Schwartz [04:15]: "... it's give or take, 30% tariffs now. ... down to 10% on Chinese goods."

• China to United States:

  • Reciprocal Tariffs: Lowered from 125% to 10% on U.S. exports to China, mirroring the reduction in American tariffs.

Duration and Future Negotiations

The agreement is set to last for 90 days, providing a window for both nations to stabilize their economic interactions and pave the way for more comprehensive negotiations.

Brian Schwartz [13:17]: "I think that there's going to be future talks. The expectation is in a matter of weeks they're going to be talking again."

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5. The Fentanyl Factor: A Lingering Contention

While the trade deal addressed numerous economic tensions, the issue of fentanyl trafficking remained unresolved. The U.S. placed significant emphasis on China's alleged role in the illicit fentanyl trade, a point of contention that Beijing staunchly denies.

Scott Besant’s Stark Illustration

During a pivotal moment in the negotiations, Besant used a chilling analogy to underscore the deadly impact of fentanyl:

Brian Schwartz [09:52]: "Scott, Besant sat down with China counterparts and picked up, there was a plate of sugar on the table. And he takes a little bit of sugar and says, this is how much could kill a single person. Then he picks up a little bit more and he says, this is how much could kill people across Geneva in terms of fentanyl."

Despite the gravity of the discussion, the two sides could not reach a consensus on fentanyl, although China's willingness to engage a senior official in the talks was viewed positively by the U.S. delegation.

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6. Credit Where It's Due: Scott Besant’s Pivotal Role

The success of the trade deal is largely attributed to Scott Besant, whose unwavering commitment and strategic approach earned him President Trump's trust to negotiate high-stakes agreements.

Loyalty and Leadership

Besant's loyalty to President Trump and his ability to provide candid, data-driven advice without overstepping were essential in bridging gaps during negotiations.

Brian Schwartz [05:22]: "It was loyalty. Scott Besant was during the campaign one of the handful of Wall street financiers who's willing to go on a limb and say, I am supporting Donald Trump."

Professional Demeanor

Besant's calm and composed demeanor contrasted with more aggressive counterparts, fostering a more conducive environment for dialogue with Chinese officials.

Brian Schwartz [06:56]: "He's very direct. But there's a difference between being that way and being kind of a brawler."

His ability to maintain professionalism without appearing confrontational was instrumental in achieving the temporary truce.

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7. Market Reactions and Economic Implications

The announcement of the trade deal sent ripples through global markets. Immediate reactions included:

• Stock Markets: Significant surges across U.S. and international markets.
• Currency Fluctuations: The U.S. dollar appreciated against major currencies.
• Bond Yields: Increased, reflecting market optimism.
• Consumer Impact: E-commerce giants like Temu, Shine, and Amazon began raising prices, a direct consequence of tariff adjustments.
• Business Strategies: Some companies started stockpiling goods from China, while others re-evaluated their supply chain strategies.

Brian Schwartz [12:41]: "I think that, as the President said, in these negotiations with China and other countries, the US Holds the cards."

The temporary nature of the deal offers a brief respite but underscores the volatility and unpredictability of U.S.-China trade relations.

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8. Broader Implications: Negotiating with the U.S. Going Forward

The trade deal serves as a precedent for future negotiations between the U.S. and other nations. Key takeaways include:

• U.S. Assertiveness: The Trump administration's firm stance has pressured other countries to engage more earnestly in trade talks.

  Brian Schwartz [14:35]: "It has put the squeeze on a lot of countries to come to the table and renegotiate trade deals and renegotiate business with the United States."

• Realistic Expectations: Success hinges on bringing reasonable and attainable objectives to the negotiation table, as evidenced by China's approach.

• Long-Term Strategy: While the immediate impact is a reduction in tariffs, the long-term trajectory remains uncertain, with expectations of ongoing dialogues to address deeper trade issues.

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9. Conclusion: A Momentous but Temporary Victory

The episode underscores the significance of the temporary truce in U.S.-China trade relations, highlighting the strategic maneuvering by key U.S. officials and the cautious optimism surrounding the deal. While the immediate effects are largely positive, the ephemeral nature of the agreement suggests that this is merely a stepping stone towards more comprehensive and lasting solutions.

Brian Schwartz [12:43]: "Yes, 100% in, a major win. ... it is a momentous moment for Scott Bessen's career as Treasury Secretary."

As global economies continue to navigate the complexities of international trade, the U.S.-China trade deal stands as a testament to the delicate balance of power, diplomacy, and strategic negotiation in shaping the future of global commerce.

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Additional Reporting by Jason Dougl, Rebecca Fung, and Ling Ling Wei

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Key Quotes

• Brian Schwartz [00:08]: "It was wild. It was a crazy few days. We landed on a Friday and it just carried in for 72 hours of pure nonstop work. We did not stop working. It was nuts."

• Brian Schwartz [04:15]: "... it's give or take, 30% tariffs now. ... down to 10% on Chinese goods."

• Brian Schwartz [09:52]: "Scott, Besant sat down with China counterparts and picked up, there was a plate of sugar on the table. And he takes a little bit of sugar and says, this is how much could kill a single person. Then he picks up a little bit more and he says, this is how much could kill people across Geneva in terms of fentanyl."

• Brian Schwartz [12:43]: "Yes, 100% in, a major win. ... it is a momentous moment for Scott Bessen's career as Treasury Secretary."

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This comprehensive summary encapsulates the intricate dynamics of the U.S.-China trade negotiations as reported in The Journal's episode. It offers a detailed exploration of the strategies, personalities, and economic ramifications involved, providing listeners and readers alike with a clear understanding of this pivotal moment in international trade relations.

Transcript

[Jessica Mendoza]

Brian, welcome back. How was your trip?

[Brian Schwartz]

It was wild. It was a crazy few days. We landed on a Friday and it just carried in for 72 hours of pure nonstop work. We did not stop working. It was nuts.

[Jessica Mendoza]

Our colleague Brian Schwartz covers economic policy and he spent the weekend in Geneva, Switzerland, where trade negotiations between the US And China were taking place.

[Brian Schwartz]

So the United States and China were meeting really officially, at least for the first time, to talk about this ongoing trade war between both countries. It was a big deal going into it just for the fact that they were having these talks.

[Jessica Mendoza]

But beyond the fact that the two delegations were meeting, Bryan didn't know much.

[Brian Schwartz]

The Trump administration would determine to keep these meetings a secret outside of the fact that they were happening in Switzerland. It wasn't even entirely clear, based on their one line announcement of their meetings with China, if this was even going to be in Geneva itself. That is how secret this was. So I decided the first day of talks on that Saturday to stake out the lobby of the Intercontinental Hotel. Very early in the morning, Brian was.

[Jessica Mendoza]

On the lookout for U.S. treasury Secretary Scott Besant and his entourage.

[Brian Schwartz]

And we're waiting there and, and basically the way it went was they got into this convoy of black vehicles, tinted windows, and they were just waiting there, those vehicles at the entrance of the hotel. And you've got basically a split second to make a really simple decision. You're either going to follow them there or you're not. And I decided to follow them there. So I ran to a taxi. There was a line of taxis there at the hotel, naturally. And I told the taxi driver to follow the convoy of vehicles and do not stop until they stop driving. Get out of the car.

[Jessica Mendoza]

The convoy with Brian's taxi tailing it made its way to a private estate just outside Geneva's city center. And it was there that the US delegation led by Besant would hammer out a temporary truce in the trade war.

[Scott Besant]

We have reached an agreement on a 90 day pause and substantially moves down the tariff levels both sides.

[Jessica Mendoza]

How would you describe Treasury Secretary Scott Bessant's role during these talks?

[Brian Schwartz]

I mean, he's been key. He has been critical for this. And to tell you the truth, if it wasn't for Scott Benson leading the way, I don't know if this would have happened.

[Jessica Mendoza]

Welcome to the Journal, our show about money, business and power. I'm Jessica Mendoza. It's Tuesday, May 13th. Coming up on the show, the Treasury Secretary and the trade deal. Before this weekend, trade relations between the US And China. The world's two Largest economies were at a low point. President Trump had set a 145% tariff on imports from China. In return, China hit back with a 125% tariff on goods coming in from the U.S. we are following the breaking.

[Brian Schwartz]

News of President Trump threatening to slap.

[Jessica Mendoza]

China with additional tariffs.

[Brian Schwartz]

Trump's tariffs are causing a whole lot of confusion among a whole lot of Americans. Families are starting to feel it.

[Jessica Mendoza]

E Commerce giants Temu, Shine and Amazon.

[Brian Schwartz]

They'Ve all started raising some prices.

[Jessica Mendoza]

The moves shook the markets. Some businesses started stockpiling goods from China while others reassessed their plans. The deal marks a respite, though. It's set to expire after 90 days. So what are the key details in the deal? Can you give a summary?

[Brian Schwartz]

It's wonky because there's been so many versions of different tariffs that we've slapped on China, but it's give or take, 30% tariffs now. And it's the same story for China versus the United States. They brought down tariffs on the reciprocal side, down to 10%.

[Jessica Mendoza]

So the US lowered its baseline tariffs all the way back down to 10% on Chinese goods. But there's an additional 20% tariff still in place tied to fentanyl on the fentanyl tariffs.

[Brian Schwartz]

They're still on there because the US has concerns about China's alleged role in fentanyl distribution and creation out in that country. And I think the idea would be that the US Is going to pitch to China that to have even better relations, they're going to insist that they crack down more and more on fentanyl and they have to prove that they're doing it pretty regularly.

[Jessica Mendoza]

Okay, so the deal gets done. And according to your reporting, Brian, a lot of the credit goes to Scott Besant. How did he wind up in that position where he has President Trump's trust to negotiate such a high stakes deal?

[Brian Schwartz]

It was loyalty. Scott Besant was during the campaign one of the handful of Wall street financiers who's willing to go on a limb and say, I am supporting Donald Trump.

[Scott Besant]

President Trump capped off the week with a great speech outlining what four years of Trump 2.0 would be like. And I don't have to advise him what to do. He's already done it. He did it.

[Brian Schwartz]

He is very straightforward with the president. He doesn't tell the president, don't do tariffs at all. The markets are tanking. He just goes to him, from what I've been told, and lays out what he sees as the facts. And he lets the President decide what to do. And he only pushes so hard. And that's how, if you wanna have success in the Trump administration, that's what you gotta do. You've gotta kind of lay things out, let it stew for a little bit, and then the President is gonna make a decision one way or another. And there is a reason some others from the administration were not brought to Geneva for these talks. Scott Bessen can be tough too, but he's very calm, cool and collected in these meetings. That's what I've heard, that's what he has said. He's very direct. But there's a difference between being that way and being kind of a brawler. And that makes a big difference when you're talking to from the Chinese government who are trying to figure this out as well.

[Jessica Mendoza]

Besant also worked well with U.S. trade Representative Jameson Greer, who was the other key figure on the US Side in these talks in Geneva. Brian was able to see the dynamic between them up close.

[Brian Schwartz]

Well, I'll tell you, those guys are thick as thieves. I mean, they are clearly very close. And during the meetings, they came off to me kind of like Batman and Robin. Right. Scott Bessant is the leader in a way because he's more senior from Wall Street. This is somebody that's been in business for a long. And Jameson Greer is kind of like Robin.

[Jessica Mendoza]

Despite their good working relationship, the duo faced an uphill battle. Tensions with China were high, and this was the first time the two countries were officially meeting to discuss Trump's tariffs. Was it surprising that a deal got done?

[Brian Schwartz]

Yes. Nobody in their right mind would have thought this was going to happen. I mean, you have to understand, you know, from the Wall Street Journal's perspective, we were just following the ball here. And before the talk started, Scott Besson effectively said these were just talks to start talks. That's what he said. And so we were going into this with almost zero expectation that anything was going to happen. And then it did.

[Jessica Mendoza]

How the deal went down is after the break.

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[Brian Schwartz]

Uh oh.

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[Jessica Mendoza]

My colleague Brian Schwartz, spent the weekend at the estate where the trade talks were happening.

[Brian Schwartz]

I mean, listen, I get out of the cab, I look around and I said, where the heck am I? And I arrived to this massive property with this over six, seven foot gate. And you look, you know, the gates start to open for some reason, I don't know why they did that. And you see what's through there and you see this beautiful home. Secret Service and other security, including from Geneva police are standing in there. And you know, you've got to the right place because this is just not normal to be happening.

[Jessica Mendoza]

It turned out Brian was at the residence of the Swiss ambassador to the United nations. And inside the US and China delegations were having surprisingly cordial discussions. Though there were areas of contention, one of the big ones was fentanyl. Trump has accused China of playing a role in the illicit fentanyl trade, something Beijing denies. And you touched on this earlier. What about fentanyl?

[Brian Schwartz]

It did come up and it was a piece, not a focal point, but a piece of the conversation. So on the first day of talks to Scott, Besant sat down with China counterparts and picked up, there was a plate of sugar on the table. And he takes a little bit of sugar and says, this is how much could kill a single person. Then he picks up a little bit more and he says, this is how much could kill people across Geneva in terms of fentanyl. This is what he was trying to say. And he picks up some more sugar and he says, this is how much fentanyl could kill people across Switzerland.

[Jessica Mendoza]

Wow, that's pretty dramatic.

[Brian Schwartz]

Yes. And he made it extremely clear with that example how important this was to figure this out, at least down the road between the US and China.

[Jessica Mendoza]

In the end, the two sides didn't come to an agreement on fentanyl, but China had brought a senior official to discuss the issue, which Besant said was a positive sign. After two days of negotiations, Besant came out to make a statement to the press.

[Scott Besant]

Both countries represented their national interests very well. We concluded that we have shared interest and we both have an interest in balanced trade. The us.

[Jessica Mendoza]

So what did China get from this deal and are they happy with it?

[Brian Schwartz]

I think that China should be very happy with the deal because now the US got the reciprocal tariffs down and it's kind of, in a way, albeit with tariffs still on China from the US side, from what Secretary Benson said, a clean slate, a fresh start between both sides. That's clearly how the US are going at this from what China said around the same time of the deal, it is clearly how China's looking at this, that this is kind of restarting negotiations between both countries, which a month ago, I'll tell you, I didn't think was ever going to happen. And that's why it's super positive for China. China's goal was to have some of the tariffs dropped. I don't think it was any more complicated than that. I don't know if they expected the agreement to be made this weekend and then the tariffs were going to be announced to be dropped. But I think that the goal, short and long term by China was to get these tariffs dropped off of them a little bit, and the US Gave them that.

[Jessica Mendoza]

And for the US did the US get the deal that they wanted?

[Brian Schwartz]

Well, I think that the US Got as close to an equal deal with getting the tariffs off of the US Goods from China, at least a chunk of them. And I think that is a win. I think that, as the President said, in these negotiations with China and other countries, the US Holds the cards. And I do agree with him there. I do think that's true for Scott Besant.

[Jessica Mendoza]

Was this a win?

[Brian Schwartz]

Yes, 100% in, a major win. Because again, dealing with China has been among his top priorities, if not arguably his number one priority since being brought into the trade negotiations with the other U.S. officials. And it is a momentous moment for Scott Bessen's career as Treasury Secretary. And I think if he can keep racking up wins with China, it's a big deal for his career.

[Jessica Mendoza]

At this point. Where does US And China trade go from here?

[Brian Schwartz]

I think that there's going to be future talks. The expectation is in a matter of weeks they're going to be talking again. I think they're still a long ways away from getting some sort of major trade back and forth deal happening beyond the drop of tariffs, but we'll have to wait and see.

[Jessica Mendoza]

After the deal was announced, stock markets in the US and elsewhere surged. The dollar rose, bond yields went up, and exporters breathed a sigh of relief, at least temporarily. These talks and the deal that was reached, what does this tell other countries about what negotiating with the US Going forward might look like?

[Brian Schwartz]

I think the administration has been clear that if you come there with, you know, reasonable expectations, which I think the Chinese, to be fair to them did, I think that the Chinese came in knowing they could not ask for the barn. You know, you have to come in and ask for half the barn or space somewhere else. And you have to be realistic because of who's running the show on the US Side, and that's President Trump, who is a big believer in the tariffs.

[Jessica Mendoza]

I mean, does this say to you that maybe the Trump administration's approach to tariffs, as wild as it has been the last few weeks, that it's effective?

[Brian Schwartz]

I think it has put the squeeze on a lot of countries to come to the table and renegotiate trade deals and renegotiate business with the United States. It may not be changing anything in the short term with how we deal with other countries on trade, but it does kind of pressure other nations, China included, to really take the US Seriously now that they're not playing around when it comes to trade and that there is going to be a realignment on how the United States deals with other countries and trade. And it shows that the president isn't playing around. And for, you know, I mean, politically, for other countries, for other country leaders, that's an important signal to, you know, take in, frankly.

[Jessica Mendoza]

That's all for today. Tuesday, May 13. The Journal is a co production of Spotify and the Wall Street Journal. Additional reporting in this episode from Jason Dougl, Rebecca Fung and Ling Ling Wei. Thanks for listening. See you tomorrow.