U.S.-China trade talks took center stage as Treasury Counselor Joe Lavorgna said the United States has leverage and that “very good progress” is being made in high-level discussions between Washington and Beijing.
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Speaking in a televised interview, Lavorgna pointed to ongoing meetings between the Treasury Secretary and Chinese counterparts and a strong working relationship between President Donald Trump and President Xi Jinping. While withholding specifics, he framed the conversations as “constructive,” adding that financial markets—sitting near record highs—may be correctly anticipating forward movement.
“There’s very strong constructive discussions going on,” Lavorgna said, emphasizing that both sides are engaged and that more details could emerge in the coming days and weeks.
Where U.S.-China trade talks stand after a new diplomatic push
U.S.-China trade talks have accelerated across multiple channels, according to Lavorgna, who described the latest rounds as the Treasury Secretary’s fifth meeting with Chinese officials. He said the administration believes it has leverage and that Beijing “wants to work with us to do what’s best for everyone,” without outlining concrete deliverables.
Key points from the counselor’s remarks:
- The administration’s priorities include access to rare earths, alongside safeguarding national security via export controls.
- The White House is focused on reindustrializing the U.S. manufacturing base, with tariffs described as a key instrument in that strategy.
- Both sides are maintaining dialogue, but the complexity of supply chains means outcomes will take time to finalize.
Lavorgna also highlighted global diplomatic efforts he said could support trade and investment flows, citing progress with South Korea on a trade deal and broader regional initiatives. Those claims could not be independently verified during the interview.
Tariffs, rare earths and industrial policy in focus
Lavorgna argued tariffs have generated substantial revenue for the U.S. and asserted that “China is paying a substantial portion,” while noting October could set a record month for tariff duties. He did not provide methodological details for those figures.
Beyond tariffs, the counselor pointed to industrial policy tools, including efforts by the Treasury’s Office of Tax Policy and the IRS to finalize guidelines for full expensing of factories—measures intended to catalyze a manufacturing buildout once enacted. He called for reopening the government to ensure those rules are completed by year-end, describing them as a potential spark for an “industrial building boom” in 2026.
On critical materials, Lavorgna said the administration wants greater access to rare earths while preserving national security through export controls. Any trade framework would likely need to address supply chain resilience for inputs central to semiconductors, batteries and advanced manufacturing.
Markets rally as growth estimates firm, but data are constrained
Lavorgna noted that equity indexes have rebounded from a recent correction and that 10-year Treasury yields are lower by roughly 50 basis points from their highs, conditions he said reflect investor optimism. He cited estimates showing real GDP rising at or near a 4% pace in recent quarters, crediting business investment and resilient consumer spending.
At the same time, he warned that the government shutdown is depriving policymakers and businesses of key data, complicating decisions by the Federal Reserve and corporate planners. Without official releases, market participants have relied more heavily on private surveys and high-frequency indicators to gauge hiring, inflation and orders.
The shutdown’s drag and the policy dilemma
The counselor described the ongoing government shutdown as a meaningful economic headwind, estimating potential weekly losses to GDP and urging a resolution to restore normal statistical reporting and policy operations. He argued that timely data are essential for the Fed and for businesses making investment choices tied to U.S.-China trade talks and broader economic conditions.
Separately, he flagged work underway on tax implementation rules that, in the administration’s view, would encourage factory construction and capital deepening. Those initiatives, he said, depend on government agencies being fully operational.
Why U.S.-China trade talks matter for businesses and investors
The trajectory of U.S.-China trade talks touches a wide set of stakeholders:
- Manufacturers: Outcome clarity on tariffs and export controls can define cost curves, supply chain routing and plant location decisions.
- Technology and energy: Access to rare earths and advanced inputs influences hardware roadmaps, battery storage and clean-tech deployment.
- Consumers: Tariff policy can affect prices on imported goods, though pass-through depends on competitive dynamics and currency moves.
- Markets: Forward guidance on talks can shift risk appetite, valuations and sector leadership, particularly in industrials, tech hardware and commodities.
Investors will also watch for any linkage between trade outcomes and domestic policy steps—such as expensing rules—that could amplify capital spending.
What to watch next in U.S.-China trade talks
Signals to monitor in the weeks ahead:
- Leadership engagements: Any formal readouts from meetings between top officials that outline timelines, working groups or target areas.
- Tariff contours: Clarifications on tariff rates, product coverage and potential sequencing of reductions if milestones are met.
- Rare earths and critical inputs: Provisions that address supply assurance, environmental standards and national security screening.
- Export controls: Any updates to licensing, entity lists or screening frameworks that affect dual-use technologies.
- Implementation detail: Dispute-resolution mechanisms, monitoring protocols and measurable deliverables that reduce ambiguity.
U.S.-China trade talks could also intersect with related regional agreements or supply chain diversification initiatives, impacting how quickly any new framework shifts real-world flows.
Reactions and independent analysis
Market participants are generally constructive on the idea that dialogue reduces uncertainty, which can support multiples and investment planning. Business groups, however, often emphasize the need for durable, verifiable outcomes—especially in sensitive sectors where rules on data, IP and technology transfer matter as much as tariff schedules.
Trade economists note that tariffs can raise input costs for domestic producers even as they seek to boost onshore manufacturing, creating a policy trade-off. The net effects depend on sector exposure, exchange rates and the elasticity of supply and demand. In this context, concrete milestones from U.S.-China trade talks could help firms weigh the balance between resilience and cost.
The bottom line
U.S.-China trade talks are back in focus, with Treasury Counselor Joe Lavorgna describing momentum and U.S. leverage while urging a government reopening to finalize key industrial policy rules. Markets appear to be pricing a constructive backdrop, but businesses are waiting for hard details on tariffs, export controls and critical material access.
Until then, the path forward hinges on turning constructive rhetoric into verifiable steps. Clear deliverables—and timely data—will determine whether the current optimism translates into durable investment, supply chain stability and balanced growth.
FAQ’s
What is the latest on U.S.-China trade talks?
Treasury Counselor Joe Lavorgna says discussions are “constructive,” with multiple high-level meetings and optimism for more details in coming weeks. Markets are reacting positively while specifics are still pending.
How could U.S.-China trade talks affect tariffs and consumer prices?
Outcomes could reshape tariff rates and coverage. Tariffs are charged to importers, and costs may be passed to businesses and consumers depending on competition, contracts and currency moves.
Why are rare earths central to U.S.-China trade talks?
Rare earths are critical for semiconductors, EVs and defense tech. Negotiations often focus on supply assurance, diversification and export controls to balance economic needs and national security.
How might U.S.-China trade talks impact markets and supply chains?
Clear, verifiable agreements could reduce uncertainty, support investment and reroute supply chains. Ambiguity or new restrictions could raise costs, delay capex and increase volatility across industrials and tech.
Article Source: CNBC Television
