[Text/Observer Network Qi Qian] The high-level economic and trade talks between China and the United States have achieved results, and both sides agree to reduce tariffs within 90 days, lowering the tax rate by 115%.

"It's obvious that (U.S. President) Trump blinked first," Larry Summers said in an interview on CNN program on May 12 local time. Summers served as Treasury Secretary during the Clinton administration and as Director of the White House National Economic Council during the Obama administration. He is currently a professor and honorary president at Harvard University.

According to Summers' tweet on social media platform X, he talked about the high-level economic and trade talks between China and the United States when interviewed by CNN that day.

Summers stated that the achievements made in the talks with China were "likely an effective signal" indicating that the Trump administration was giving up its highly punitive tariff policy against China. He said that after Trump announced the "reciprocal tariff," there was a fairly clear pattern in the U.S.: increases in tariff commitments led to market declines; signs of retreat led to market rises.

Screenshot of the tweet

On April 2, Trump raised the tariff stick worldwide, imposing so-called "reciprocal tariffs," with the tariff on China reaching as high as 145%. In response, China immediately introduced a series of targeted countermeasures, including increasing tariffs and implementing export controls on seven categories of heavy rare earth-related items. Previously, some U.S. media compared this tariff war to the "chicken game," believing that whoever could not bear it first and "blinked" would be the loser.

When asked who "blinked" between Trump and China, Summers replied: "I think it's very clear that Trump blinked. After all, the U.S. had firmly stated that it would indefinitely implement the tariff policy. In contrast, China did not make any significant or notable changes to its policies."

"Sometimes, taking a step back can lead to vast horizons," Summers further pointed out. "When mistakes are made, the best course of action is usually to correct them and take a step back, even if it brings some embarrassment. I appreciate the actions taken by Treasury Secretary Bassett and commend his leadership."

Summers said he now felt "some relief" because, at present, the Trump administration's obsession with its "disastrous tariff policy" was "less than I feared." He believed that government officials were observing economic forecasts and market reactions and making adjustments through "blinking." However, he still predicted that the possibility of a U.S. economic recession remained close to 50%, or slightly higher.

Summers has consistently criticized Trump's tariff policies.

On April 1 local time, just hours before Trump announced the so-called "reciprocal tariffs," Summers accepted an interview with Bloomberg, fiercely criticizing his tariff strategy as "absurd" and "naive." He warned that the tariff increase measures would bring a shock similar to an oil crisis to the U.S. economy, thereby weakening its production capacity, pushing up prices, and increasing unemployment.

"We usually discuss supply crises brought about by rising oil prices, earthquakes, or droughts, but this will far exceed that. The main question is how much damage it will cause," Summers said. "This is a typical supply shock," which would make the Federal Reserve "struggle," and the direct impact would be to push up prices, followed by impacts on employment and investment.

He pointed out: "This is an influential economic policy that even affects diplomatic relations and national security."

April 1, Summers accepting Bloomberg interview Video screenshot

The high-level economic and trade talks between China and the U.S. were held in Geneva, Switzerland from May 10 to 11. Both sides agreed to reduce tariffs within 90 days, lowering the tax rate by 115%. This news quickly attracted high attention from the international community and the market, with the general view being that this was an important step taken by the world's two largest economies in resolving trade disputes.

According to Reuters, after the announcement of the message, investor confidence in avoiding a full-scale trade war increased, with European and Asian stock markets rising and U.S. stock indexes surging after the opening. CNBC cited analysis saying that one should not expect the trade issues between the U.S. and China to be easily resolved. However, the consensus reached by both sides eased trade tensions and created a good starting point for subsequent contacts.

Bloomberg's analysis suggested that the agreement ultimately reached by China and the U.S. met "almost all of China's core demands." Not only were tariffs significantly reduced, but mechanisms were also mentioned to continue consultations on economic and trade relations. The report pointed out that it was precisely because China insisted on a tough stance in the face of Trump's tariff threats that it ultimately forced the U.S. side to concede and meet China's main trade demands.

Analysts said that this tug-of-war not only taught the lesson that "economic strength is crucial," but also proved that China's strategic focus on manufacturing and independent development was correct. Chinese scholars said that regardless of whether it was Trump's previous term or current term, China would not compromise in key areas, but beyond the "red line," there were many differences between China and the U.S. that could be bridged through negotiations. However, Trump's "capriciousness" still needs to be guarded against.

Experts on China from the U.S. side believed that if China had not previously taken such strong countermeasures - including tariffs and export controls - the Trump administration would never have withdrawn the imposed high tariffs. Therefore, in his view, China was clearly the biggest winner in this round of tariff disputes.

According to a report by The Hill, White House Press Secretary Caroline Levitt said on Fox News on May 12 that this was an initial agreement reached between China and the U.S., and also an extraordinary first step in the right direction.

On May 12, the Ministry of Commerce spokesperson gave a talk regarding the joint statement of the China-U.S. economic and trade talks. The spokesperson said that the talks had reached a joint statement, which was an important step taken by both sides through equal dialogue and consultation to resolve differences, laying the foundation and creating conditions for further narrowing gaps and deepening cooperation.

The spokesperson said that both sides agreed to establish a China-U.S. economic and trade consultation mechanism, maintain close communication on each other's concerns in the economic and trade field, and carry out further consultations. Both sides will conduct consultations regularly or irregularly in China, the United States, or a third country as agreed upon. As needed, both sides may also conduct working-level consultations on relevant economic and trade issues.

This article is an exclusive article by the Observer Network and cannot be reprinted without permission.

Original text: https://www.toutiao.com/article/7503897166751154726/

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