US trade discussions with China have stalled, according to Treasury Secretary Scott Bessent.

He said on May 28, 2025, that further progress may require direct involvement from US President Donald Trump and Chinese President Xi Jinping.

Bessent told Fox News that while a temporary truce in the trade war was reached two weeks ago, progress has since been limited.

He indicated that additional talks are anticipated in the coming weeks and suggested a possible call between the two leaders to advance negotiations.

“This is going to require both leaders to weigh in with each other,” he said.

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🔗 Source: Reuters

🧠 Food for thought

1️⃣ Court battle reveals constitutional tension in U.S. trade policy

The legal whiplash over Trump’s tariffs, ruled unlawful one day and reinstated the next, highlights the constitutional tensions underlying U.S. trade policy.

The Court of International Trade’s ruling specifically determined that Trump overstepped presidential authority by using the International Emergency Economic Powers Act (IEEPA) to impose tariffs, affirming that regulating commerce is Congress’s exclusive power 1.

This reflects historical struggles between executive and legislative branches over trade authority, with presidents increasingly using national security justifications to implement tariffs without congressional approval since 2018 2.

The quick reinstatement by the appeals court maintaining these tariffs while litigation continues creates significant uncertainty for businesses, as they face an average household purchasing power reduction of $950 if the tariffs remain in place 3.

The legal battle could potentially reach the Supreme Court, setting precedents about presidential trade powers that would impact economic policy for decades to come.

2️⃣ US-China trade relationship shows diminishing returns from tariff strategies

Despite years of escalating tariffs on Chinese goods, the fundamental trade issues between the U.S. and China remain largely unresolved.

The U.S. trade deficit with China still stands at $295 billion as of 2024—the lowest since 2009 but still the largest deficit with any trading partner—suggesting limited effectiveness of tariff policies in addressing structural imbalances 4.

Economic research indicates that the tariff war has resulted in approximately 245,000 American job losses while failing to achieve its stated objectives of forcing major Chinese economic reforms or substantially reducing the trade deficit 5.

The 90-day truce represents the latest attempt to pause hostilities that have repeatedly failed to produce lasting solutions to issues like intellectual property protection, forced technology transfers, and state subsidies 4.

This pattern of short-term truces followed by renewed tensions has become characteristic of U.S.-China trade relations, with economists increasingly questioning whether tariffs produce more economic harm than leverage.

3️⃣ High-level leader intervention reflects shift from technical to political trade diplomacy

Bessent’s statement that progress will require direct involvement from President Trump and President Xi represents a significant shift in how trade negotiations operate.

This pattern of elevating trade issues to leader-level discussions has become increasingly common since 2018, reflecting how technically complex trade issues have become intertwined with broader strategic competition between the nations 6.

Historical precedent shows that major breakthroughs in U.S.-China relations have often required direct leader engagement, dating back to President Nixon’s 1972 visit that initiated the modern relationship 7.

The need for leader intervention highlights how technical trade negotiators lack the authority to make concessions on issues now considered matters of national security, such as technology access and critical supply chains 4.

This diplomatic approach represents a departure from the WTO-centered, rules-based trading system that prevailed from 2001-2017, where disputes were primarily handled through established multilateral mechanisms rather than bilateral leader summits.

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