The Journal. - Inside the Surprise U.S.-China Trade Deal

Episode Date: May 13, 2025

On Monday, to the surprise of global investors, the U.S. and China agreed to a 90-day trade deal. The deal slashed tariffs between the two countries and sent stocks surging.  Leading the negotiations on the U.S. side was Treasury Secretary Scott Bessent. WSJ’s Brian Schwartz, who covered the talks in Geneva, explains how Bessent became President Trump’s man on trade policy and got China to ‘yes’ on a temporary truce. Jessica Mendoza hosts.   Further Listening: -Made In America? Shoe Companies Already Tried That.  -Taking Stock of the ‘Sell America’ Trade  -China Unleashes A Trade War Arsenal  -Tariff Trade-Off: Jobs vs. Higher Prices  Sign up for WSJ’s free What’s News newsletter . Learn more about your ad choices. Visit megaphone.fm/adchoices

Brian, welcome back. How was your trip? 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. Our colleague Brian Schwartz covers economic policy, and he spent the weekend in Geneva, Switzerland, where trade negotiations between the U.S. and China were taking place. 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.

But beyond the fact that the two delegations were meeting, Brian didn't know much. The Trump administration were determined 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 on the lookout for U.S. Treasury Secretary Scott Bessent and his entourage. And we're waiting there 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.

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 U.S. delegation, led by Besant, would hammer out a temporary truce in the trade war. We have reached an agreement on a 90-day pause and substantially moved down the tariff levels. How would you describe Treasury Secretary Scott Besson's role during these talks? I mean, he's been key. He has been critical for this.

And to tell you the truth, if it wasn't for Scott Besson leading the way, I don't know if this would have happened. 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. When does fast grocery delivery through Instacart matter most? When your famous grainy mustard potato salad isn't so famous without the grainy mustard. When the barbecue's lit, but there's nothing to grill.

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Instacart, groceries that over-deliver. 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 US. We are following the breaking news

of President Trump threatening to slap China with additional tariffs. Trump's tariffs are causing a whole lot of confusion among a whole lot of Americans. Families are starting to feel it. E-commerce giants, Tmoo, Shine, and Amazon, they've all started raising some prices. 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? 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%. So, the U.S. lowered its baseline tariffs all the way back down to 10 percent on Chinese goods. But there's an additional 20 percent tariff still in place tied to fentanyl. On the fentanyl tariffs, they're still on there because the U.S. 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 U.S. 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. Okay, so the deal gets done. And according to your reporting, Brian, a lot of the credit goes to Scott Bessent. How did he wind up in that position where he has President Trump's trust to negotiate such a high stakes deal? It was loyalty. Scott Bessent 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.

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. 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, you know, if you want to have success in the Trump administration, that's what you got to do. You've got to kind of lay things out, let it stew for a little bit, and then the president is going to 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 Besson 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's 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 people from the

Chinese government who are trying to figure this out as well. Besson also worked well with U.S. Trade Representative Jameson Greer, who was the other key figure on the U.S. side in these talks. In Geneva, Brian was able to see the dynamic between them up close.

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 Besson 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 time. And Jameson Greer is kind of like Robin. 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? 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. How the deal went down is after the break.

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New four-piece French toast sticks, bacon or sausage wrap, biscuit or English muffin sandwiches, small hot coffee, and more. Limited time only at Participating Wendy's Taxes Extra. My colleague Brian Schwartz spent the weekend at the estate where the trade talks were happening. 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. 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?

It did come up and it was a piece, not a focal point, but piece the conversation. So on the first day of talks Scott Besant sat down with Chana 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.

Wow. That's pretty dramatic. 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. 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. Both countries represented their national interests very well. press. So what did China get from this deal? And are they happy with it? 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 of Defense 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 with which a month ago I'll tell you I didn't think was ever gonna 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 the agreement to be made this weekend or 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, or 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. And for the US, did the US get the deal that they wanted? Well, I think that the US got as close to an equal deal with getting the tariffs off

of 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, was this a win? Yes, 100 percent, and 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 Besson'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. At this point, where does U.S. and China trade go from here? I think that there's going to be future talks. The expectation is in a matter of weeks that there's going to be future talks. The expectation is in a matter of weeks they're going to be talking again. Yeah. 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. 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? 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 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,

not as President Trump, who is a big believer in the tariffs. 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? I think it has put the squeeze on a lot of countries to come to the table and renegotiate trade 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 real line man on how the United States deals with other countries in 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. That's all for today, Tuesday, May 13th. The Journal is a co-production of Spotify and The Wall Street Journal. Additional reporting in this episode from Jason Douglas, Rebecca Fung, and Ling Ling Wei. Thanks for listening. See you tomorrow.