US and China set to hold trade talks in Geneva, Switzerland
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Hello and welcome to World Business Report from the BBC World Service. I'm Roger Hearing and on this edition we'll be looking at the prospects for this weekend's US-China talks in Geneva and asking if the tariff war can be eased. We'll be hearing from businesses hit by high surcharges.

and from former trade negotiators on what could be achieved in Geneva. Plus, Gulf of Mexico or Gulf of America? Well, now Mexico is suing Google over all that.

But first, the Swiss city of Geneva has seen some very consequential peace talks over the last couple of centuries. Well, the discussions coming up on Saturday and Sunday between China and the United States might not be about ending a real war, but they could help bring peace to the conflict over trade that's caused global economic turmoil in recent months.

The US Treasury Secretary Scott Besant and the Chinese Vice Premier He Leifeng will talk tariffs, which are currently 145% on most Chinese imports to the US. Donald Trump said on social media an 80% tariff on Chinese goods seems right, but in his words it was up to Scott B. Well, here's the press secretary, Caroline Levitt, speaking to reporters ahead of those talks.

The president still remains with his position that he is not going to unilaterally bring down tariffs on China. We need to see concessions from them as well. And again, that's part of the reason that Secretary Besson is going to talk to his Chinese counterparts this weekend to start those discussions in person. As for the 80 percent number, that was a number the president threw out there. And we'll see what happens this weekend and always in the effort of transparency. I'm sure you'll hear directly from the Treasury secretary or the president after those negotiations conclude.

Caroline Levitt there at the White House. So what is at stake? Here's the BBC's New York business correspondent, Michelle Fleury. Well, it really comes down to who's going to blink first in this ongoing trade war between the US and China. We've seen both sides imposing hefty tariffs on each other's goods, and that's made trade between the world's two big economies pretty much impossible at this point.

So what's going to happen next? Well, the US Treasury Secretary Scott Besson and Trade Representative Jameson Greer are due to meet with China's top economic official in Geneva on Saturday. And this could lay the groundwork for broader talks. But here's the thing. Most analysts I'm speaking to say don't hold your breath for any major breakthroughs at this point.

Now, if we look at what Trump has been saying, he's laying out his conditions on a post in Truth Social saying China needs to import more U.S. goods. And in exchange, he wants to see the U.S. drop those tariffs from 145 percent down to 80 percent. The Chinese, well, they're being a bit more cautious here. They're not willing to make concessions unless they see some real give from the U.S.,

The reality is that both sides are walking a tightrope. Neither wants to be seen as the one that's backing down. And here's the thing, although they've agreed to meet in Geneva, neither side can even agree on who's called the meeting in the first place. So it's pretty challenging. Now, at best, analysts say they think there might be a temporary pause on tariff hikes or that we could just see a mutual agreement to keep talking.

But the real sticking points dividing the two sides, well, these are deep-rooted and very few are expecting those to be resolved quickly.

Michel Fleury. Well, the people at the sharp end of all this, of course, are the exporters and the importers. Tat Kay is a Chinese exporter who sells personal care appliances in the United States. We have to stop production on existing orders. In some cases where, you know, we have work in progress on assembly line already, we come to an agreement to basically finish the goods, but we would hold it in our warehouse. In the longer term, we're going to have to stop production.

Most factories do have some cash reserve to basically ride this out for maybe a month or so. But if this goes on any longer, I don't see how any of these factories, us included, can survive. And so losing 70% of your business, we have to make some drastic changes.

Well, US importers are facing a pretty similar dilemma. I spoke to Blake Garfield of Bedrooms & More in Seattle, who supplies upholstery and furniture. What would he like to come out of the Geneva discussions? It'd be very nice if there was a lag, so a lead time for businesses to adapt to new supply chain needs and new cost structures.

The ready, fire, aim approach has created a lot of trauma for our business and I know for other businesses of a similar scale. And during the previous Trump regime, there was a spur of the moment 25% tariff that was thrown on all things from China. And for us to try and find a new supplier, it was nearly impossible. People weren't returning my phone calls because I'm not big enough to get to the front of the line.

For our purposes, give us a sense of how your business depends on imports from China. How does it work? We're a small business in Seattle. I have 36 employees. But our industry, home furnishings, is very international. There are suppliers that we work with that are domestic. We have suppliers in Malaysia, India, China, the UK, Norway, Asia.

And when it comes to the cost of goods, sometimes there just isn't manufacturing for what we want domestically at all. It's just not available. One of our suppliers does bamboo furniture, and they're in China because that's where the bamboo is harvested. It's where it's cultivated. And there are some specific things where the equipment just doesn't exist in the U.S. So if you can't get the things you need from China, I mean, 145% tariffs,

It kind of puts it out of operation. Can you keep going? For us, yes, but it's complicated. We're diversified enough that we are not just in one category. Our most popular product happens to be made in China. It's a wool-filled mattress pad that's machine-washed, machine-dry. The cotton is from Pakistan. The wool is from Belgium. The assembly is done in China, and then I designed it here in Seattle, and

And that finished good if it was one and a half times more expensive. It's not competitive. It's unique, but it's going to be difficult for me to find somebody else who can make that because people aren't doing that. And I've spent weeks trying to find a supplier that can do it domestically. There will be tariffs on even the components because the fabric is going to have a tariff. The

The fiber is going to have a tariff. And then the cost of manufacturing is going to go up. And I don't know what the percentage difference would be if the tariff were 50% in China. Would that still be the least expensive way to do it for a consumer? I just don't know yet. Well, Donald Trump's talking about 80%. Would you be able to live with that? I guess clarity would be nice.

Would I be able to live with that? No. I mean, what I would end up doing is fumbling through the next six to 12 months trying to find a supplier while I run out of my most popular good, which represents...

you know, 10% of my business, it'd be pretty traumatic. And no, 80% would be scary. And you're a relatively small company. So I guess trying to find other suppliers, trying to get them to meet your needs is quite challenging. Their first question has always been, you know, how many containers are you going to do a month? And I might do one or two a year. And the

They're like, well, we've got Costco and Target and Walmart that are calling us and they're saying we need to shift our supply to another country. They're going to give me 100 containers a month. There's no point in them calling back because it's not worth their time.

So, Blake, is this kind of existential for you? I mean, could you go bust if this process, and as you say, the uncertainty continues? I'm very fortunate that I'm not going to go out of business based on a tariff in one country. And because we have a diversified enough offering...

But I have a friend who owns a company that if there is not a much, much, much reduced tariff in China, they will go out of business. They have no ETA on any future production and finding someone who can make their product in a different factory in a timely fashion will mean that they will go many, many months without anything to sell.

I'm fortunate that I have a 27,000 square foot warehouse with millions of dollars worth of inventory in it. So I can live off, I mean, essentially my fat until I find an alternative solution and hope that the market will bear whatever the new price has to be. Blake Garfield there speaking to me from Seattle. So what is likely to be on the table in Geneva this weekend? And what can either side concede?

Joining me is Jeff Moon, founder and president of China Moon Strategies, China's trade consulting firm and also former U.S. assistant trade representative for China. Also with me, Rufus Yerxa, former U.S. trade negotiator and WTO deputy director general between 2005 and 2013. Gentlemen, both, thanks for being with me here. Jeff, let me...

try and see if we can get into a sense of what is on or could be on the table in Geneva. So if you can wear a China hat for me effectively, what is it that China wants to come out of this? China, first of all, wants respect. And they've said this many times. It sort of strikes Western ears as odd. But this gets to China's very unfortunate history of foreign domination and the very harsh rhetoric that Trump uses about China. So the Chinese want to be treated respectfully and as equals.

They also want to establish a procedural way to move forward in negotiations. Trump wants to just get on the phone and spontaneously talk things through with Xi Jinping. That is exactly the opposite of how the Chinese operate. The Chinese have been asking since Trump's election for a single point of contact. They want to set up work streams and then bring finished products to leaders for them to bless.

Then the Chinese want substantively to know what is it exactly that the U.S. wants. Trump talks about a wide variety of things and nobody in the Chinese government nor in the U.S. government knows exactly what he wants. And then finally, what the Chinese want is to break the current de facto embargo imposed by the U.S. due to these tariffs. One hundred forty five percent. A lot of people can't do business. There's talk of 80 percent.

In Washington, a lot of folks say that 60% is the prohibitive level. But I've talked to people in various industries that believe that the number is even lower. So this is now Trump's rhetoric is not coming to the fore. Reality is setting in. You know, there is a real prospect of economic damage and the Chinese want to break the embargo. OK, well, Rufus, let me bring you in on this. I mean, if if that indeed is the kind of thing the Chinese are looking for, is it what Scott Besant is going to bring to the table?

Well, I think, you know, there's just no doubt that the gap between the two and expectations of what would be an acceptable deal is still immense. And, you know, you see Trump now beginning to negotiate with himself. This is not really the way trade negotiations have been conducted historically. Normally, the officials start negotiating.

fighting with each other and the heads of government wait until a clear deal starts to take shape. But right now, you know, I don't have great expectations that the Chinese are going to want to back down when Trump has raised these tariffs in a very short period to such an

such a high level. I think the more likely outcome from this first weekend is that they agree to keep talking with each other. But they're very, very far from being able to reach a deal. You know, this is not like the UK deal or with some other countries where it's politically acceptable to resolve things quickly between the two sides.

You know, Trump's supporters expect him to get a major concessions from China. We're talking about a 600 billion dollar bilateral trading relationship. It's not going to happen overnight. But Rufus, I mean, Scott Besant is in there. I mean, he's a more conventional person, I suppose, in that sort of environment. Will he actually be putting numbers on the table, do you think, at this point?

I think he might. He might be forced to because of the way Trump is playing this. Trump himself is putting numbers on the table. But the problem is, you know, Trump's caught between a rock and a hard place in terms of how this impacts the U.S.,

As as you just heard, the impact on on small businesses, on consumers, on the market and everything else could be immense if he doesn't move towards a deal. But if he does move towards a deal and has to back way, way off of his, you know, his big tariffs.

then he's got a political problem with that. So, you know, I think it's going to take time for that to sort out. All right. So, Jeff, supposing Scott does bring some numbers to the table like that. It doesn't sound like any of the kind of things that are on China's shopping list really for this. Will they be willing to make this a first step and keep coming back and at least keep a conversation going?

Yes, they will keep on talking about things. And they've said that they want to do that because you have this relationship that's involving trade of more than a half a trillion dollars a year. It's existential for both countries. So they will. I think that what's going to happen in these negotiations is that there will be some kind of accommodation on tariff rates, right?

And that will be something positive. I think that there might be the Trump might back off a little bit. There may even be some choreography where they each gradually announce reduced rates to a certain extent. I think tariffs is something they can talk about.

But as the previous speaker said, you know, industrial policy issues, we've been discussing those with China for literally decades. And I don't see a resolution in sight anytime soon. But that's really interesting. So Rufus, potentially, you know, you may be wearing your U.S. hat and Jeff wearing the China hat. If there is room for numbers to be announced and then perhaps a graded moving down of the tariffs, is that something that Scott Besant and indeed Donald Trump would wear?

Well, yeah, but you have to remember, you know, Trump did a deal with the Chinese in his first term. And a lot of what both sides put on the table never really came to fruition. The U.S. never brought down the tariffs that Trump had imposed. And the Chinese never really delivered on these commitments to buy more from the U.S.,

So that deal really in many ways was a bust and we were left with high tariffs and no real resolution of as –

As we've just discussed, no resolution of the industrial policy issues that are really at the heart of the problems between the two countries competitively. Well, it'll be interesting to see what this actually gets there on the table and what we come away with at the end of these Geneva talks. But gentlemen, thank you so much for taking me through that. Jeff Moon there and Rufus Yaksa.

Well, one of the issues, of course, at the key battlegrounds really in all this in the US-China trade war is cars. The US has punitive tariffs on Chinese electric vehicles, which effectively blocks imports. Still, many Chinese EV brands are expanding their markets and going abroad with models that are both packed with features and cheaper. As Marketplace's China correspondent Jennifer Pak reports.

At the Shanghai Auto Show, there are nearly 1,300 cars on display, and 70% of them are EVs. New models are introduced with flares. You've probably never heard of these EV brands, like Chinese startup Xpeng. These two seats are standard for ventilation and heat massage. Right?

Product manager Xu Pengfei shows me the firm's flagship electric sedan, the P7 Plus, spacious with leather seats. He says the car uses a lot of artificial intelligence, say, to adapt the car to road conditions.

For example, if the car camera detects a pothole ahead, the car will adjust and make the damping softer. This would allow for a smoother ride over the pothole. The P7 Plus is in the premium range. It retails in China before government subsidies and tax exemptions for $29,000. For that price in the U.S., you get a basic EV model. But many of these Chinese EVs are anything but basic.

Like this next model I check out by EV maker Diebel. Product manager Mr. Zhang shows me an SUV, the S09, fit for a young family, he says. Which one? This one.

It's equipped with a mini fridge, seats with massage functions, and a 21-inch screen in the back seat. For $33,000, it's like a living room on wheels. Chinese consumers are spoiled for choice, Mr. Zhang says. In this highly competitive market, we'll provide them with creative products and functions that are more efficient, give better experiences at a cheaper price without sacrificing quality.

But some of the coolest tech in Chinese EVs might not be exported. I'm actually seeing a lot of features in Chinese cars that are kind of stuck in China. Auto journalist Zhu Linliao is with the Singaporean Business Times. He says each country has different regulations on emerging technologies. And many Chinese EV features like... Being able to order a cup of coffee just by talking to your car. Being able to, I would say, enjoy some of the...

semi-autonomous driving features. I think there are some features that China really leads the world in. But are only in China. Of the 13 million EVs sold last year, Xpeng and Depot combined sold less than half a million models. The two companies are not profitable yet. Neither is the next firm I'm checking out, Mio. You drive these cars a little bit like driving a jet.

David Zhang with NIO shows me an electric sedan with seats like the ones on a business jet. The ET9 model costs over $100,000 and started deliveries to customers in March.

And with 35 speakers, you can enjoy music with everyone in the car or... Oh, the music's coming out from my headrest. Checking out the NIO ET9 is Stéphane Desmet with the automaker Stellantis in Belgium. He says Chinese firms are setting the EV trends.

His firm Stellantis is helping Chinese EV firm Leap Motor sell in Europe. We have our eyes on the Chinese brands because we know they will come, but the question is when.

And yes, he says, the European Union has tariffs on Chinese EVs, up to 30-some percent. But even so, he says, Chinese EVs are much cheaper than European cars. Jennifer Pack there at the Shanghai Motor Show.

You're with World Business Report from the BBC World Service. Well, let's have a think about how all this has been playing on the markets this week, all the ups and downs about tariffs. Joining me is Susan Schmidt, Portfolio Manager at Exchange Capital Resources, based in Chicago. Susan, thanks for being with us once again. So all this tariff talk, I mean, how have the markets ended the week? What was it like on Wall Street?

Well, a lot of excitement this week as we saw the announcement from a first trade deal between the U.S. and the U.K. But with all of that excitement, the markets really did nothing this week, ending the week essentially flat, down a little bit.

Less than a percent, half a percent from Monday to Friday. And investors really waiting for more news to see what will happen with potential talks this weekend. Yeah, because it seems like the markets can't make up their minds because there's a lot out there. And I suppose the unpredictability of the man in the White House and what might come makes it very hard for investors, doesn't it?

It makes it exceptionally difficult for investors because they have nothing to pin evaluation on. And so that's what they're really struggling with. They can't target profitability. I think now the mental set is 80% has been mentioned. These 145% levels of tariffs against China have now – President Trump has come out and said potentially 80% feels about right, but he's going to leave it to –

to Scott Besant to decide. I think investors are now resetting mentally to that 80% level, but it's still up for grabs and 80% is still very, very high. Well, let's turn our focus on to something else. And one share that wasn't doing well this week, noticeably so, was Expedia, the online travel platform. They missed their quarterly revenue estimates. Are people too nervous to go away on holiday now?

Well, I think we are starting to see this nervousness creep into the consumer. And that's actually quite interesting and a signal to the White House and the administration as to the impacts that this trade tariff issue is having. Expedia reported numbers and they basically said there's just a reluctance and a lower interest in travel. That shows you that the consumer is being hit. That was one of the last holdouts where consumers were spending freely. And now we're starting to see a pullback.

Interesting that that's how people are reacting to it. Susan, thanks so much for being with us. Susan Schmidt there.

Now, soon after his inauguration, President Trump announced the Gulf of Mexico would now be known as the Gulf of America. Now, in truth, no one outside the U.S. government took much notice. It is, after all, an area, much of which lies outside U.S. territorial waters. But the White House decided to exclude Associated Press from media events because AP didn't change its guidance on what the area should be called.

And now the government of Mexico has launched a legal action against Google because it has renamed it the Gulf of America for its US users on Google Maps and other apps. Mexico's president, Claudia Scheinbaum, said the Czech giant must continue to use the Gulf of Mexico's accepted name.

What we are saying is that Google should put Gulf of America where it is Gulf of America, which is the part that corresponds to the territory of the United States, and put Gulf of Mexico to the territorial part that corresponds to Mexico and Cuba.

Sounds like a nightmare for mapmakers. What are Google supposed to do? And what are the conventions anyway about naming and renaming? Particularly now the courts seem to be getting involved. Joining me now is David Ray, an associate professor of geography and international affairs at George Washington University. David, thanks so much for being with us. I mean, Google's in a bind here, much, I guess, in the way that Associated Press are. You can't please everyone.

Well, it's difficult to strong arm bodies of water into having their names changed. Ordinarily, this is based on usage. If enough people say it, even if it's grammatically wrong, I'm thinking of just between you and I, you know, the language morphs and adapts. But the fact is people need to actually use the terms. And this is just imposed by force. Of course, it has a long history of in basically in the colonial era of renaming places. You've got New South Wales and

You know, the colony of Virginia to attract settlers is even the famous one of Eric the Red renaming a very large block of ice Greenland in order to attract settlers. It's hard for me to see an economic rationale for doing this. I don't believe that Google will actually lose money over this, although AP Associated Press did being excluded from the

Yeah, it made it very difficult for them. I suppose if Google are under legal pressure, though, because then it throws into question about the legal thing. If I suddenly decide, right, I'm now going to start calling Mexico New Spain, you know, if I suddenly start doing that and I start writing, there's nothing actually Mexico could do to stop me, assuming they'd want to.

No, there isn't. And it does come down to who controls the actual water. So whether you're looking at the exclusive economic zone or just, you know, the 12 miles out from the coast, Mexico actually controls more of the Gulf of Mexico than the U.S. does. And Cuba controls only about 6 percent. So if you're going to follow that rationale, then it should be divided in three with three different names.

So there's nothing legally, essentially, to make this. There's not an international decided list that the UN or someone says this is what we must call things. No, there isn't. And within the US government, there is a process. There's a board of geographic names. There's a foreign names committee. And in ordinary times, as in not now, there would be a consultative process, many people weighing in, talking about the pros and cons. But this is just by convention.

by fiat, you know, and it's difficult to imagine that this would stick. Yeah, because I think Turkey renamed itself Turkiye for the English-speaking world, and people generally have gone along with it, but not everyone. So, I mean, in the end, it's just custom and practice.

Exactly. Well, there's lots of historic examples. The nine dash line indicating the Chinese control of the South China Sea, which led to the movie Barbie being banned in Vietnam back in 2023. Consequences you couldn't possibly imagine coming from geography. Exactly. What a simple cartoon map in the background. Indeed. David, thanks so much for being with us. David Ray there at George Washington University. That's it from World Business Report.

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