1 week Ago By Politico
President Donald Trump stepped back from an all-out global trade war on Wednesday, but his soaring tariffs on China remain a major risk for the U.S. and world economies.
Trump announced in a post on his social media platform, Truth Social, that he will raise tariffs on Chinese goods to at least 125 percent , moving the world’s two largest economies closer to a decoupling. He also recommitted to a baseline tariff of at least 10 percent on nearly all U.S.
imports, which totaled about $3.2 billion last year, while pausing a higher set of reciprocal tariffs he announced last week on the European Union and nearly 60 other trading partners. Taken together, Trump’s 10 percent baseline tariff and sky-high duties on China still add up to a massive import tax increase on one of the country's top trade partners that is likely to raise prices for many consumer products and for intermediate goods used by manufacturers.
Beijing’s retaliation also threatens exports of American farm goods, which rely heavily on China, and other products. The additional 125 percent duty, on top of tariffs on Chinese imports the United States already has in place, could be interpreted as imposing “kind of an embargo on China, like we did in 1950s and 60s,” when Communist Party leader Mao Zedong was in power, said Ed Gresser, a former U.S.
trade official who is now at the Progressive Policy Institute, a Democratic think tank. And economists predicted Wednesday the tariff increase on China would cancel out any economic relief from the pause on other tariffs. Trump’s escalation against China “is probably more inflationary” than his original "reciprocal" tariffs, even though he suspended the high rates on the EU and other trading partners for 90 days, Jason Furman, who was head of the White House Council of Economic Advisers under former President Barack Obama, said in a post on X .
Trump insisted Wednesday that his tariffs would ultimately force Chinese President Xi Jinping to come to the table. “I think President Xi is a very smart guy, and I think we'll end up making a very good deal for both,” Trump told reporters at the White House Wednesday afternoon. “We'll get a phone call at some point, and it'll be off to the races.
” Beijing, however, has given no signs that the gambit is working. The Chinese government’s approach has been to “stand firm, absorb pressure and let Trump overplay his hand,” said Daniel Russel, a former State Department official who is now vice president for international security and diplomacy at the Asia Society Policy Institute. “Beijing believes Trump sees concessions as a weakness, so giving ground only invites more pressure.
” Even some members of the president’s own party remain uneasy about the direction of his trade policy. The tariff pause announced Wednesday “eliminates some of the downside speculation right now, but it doesn’t eliminate any of the uncertainty, unless you start seeing a deal float pretty quickly over the next couple of days with some of the major trading partners,” Sen. Tom Tillis (R-N.
C.) said at the Capitol. The United States and China, which traded nearly $582 billion worth of goods last year, have been engaged in a series of tit-for-tat tariff moves that Trump began not long after he entered office to pressure Beijing to do more to stop fentanyl from entering the United States.
It started with a 10 percent duty on Chinese goods, which was doubled to 20 percent in March. Trump increased the rate last week to 54 percent by adding a 34 percent duty to offset Beijing’s unfair trading practices. That reciprocal duty was part of the broader tariff action against the entire world that Trump partially paused on Wednesday for 90 days, after it triggered fears of a global recession and caused stock markets to plunge.
When China retaliated by imposing an identical 34 percent duty on American goods, Trump announced an additional 50 percent tariff. Beijing moved once again to match Trump’s higher rate Wednesday, prompting the U.S.
president to announce on Truth Social he was raising the U.S. duty to 125 percent, effectively immediately, even as he pulled back on his other “reciprocal tariffs,” because of the “lack of respect that China has shown to the World’s Markets.
” The on-off nature of Trump’s tariff actions brought more criticism from Democrats, who accuse him of launching a trade war with the entire world without any coherent plan for negotiating agreements with countries that are willing to make deals. And even as many lawmakers expressed relief that the president was pausing some of the most aggressive tariff hikes — raising rates into the 30s and 40s for allies like Japan and South Korea — many remain alarmed about the duties Trump maintained. Sen.
Rand Paul (R-Ky.), one of the most vocal GOP opponents of tariffs, was blunt: “10 percent tariffs are bad, but they’re better than 60 percent.” Paul added that he is concerned about the effect the escalating trade war could have on Taiwan, a key U.
S. partner that has close economic ties to China. "Jacking up the tariffs on China and going into an all-out trade war with China isn't good for our country, isn't good for Taiwan,” Paul said.
“The moment that there's no more trade with China, I think that only encourages bad outcomes for Taiwan. So I think that trade with China is good for our foreign policy, but it's also good for the consumer." “ Trump isn’t pausing tariffs, he’s putting a new 10 percent tax on everything Americans buy, and prolonging the chaos for small businesses and pain for retirees and families.
” Sen. Ron Wyden (D-Ore.), the top Democrat on the Senate Finance Committee, said in a statement.
“The lack of certainty and predictability continues for the next 90 days, and leaves millions of Americans stuck in a painful state of suspended animation about what’s next for as long as Trump is president, Wyden added. “I’m also concerned the all-out trade war with China could reduce their cooperation against the deadly fentanyl epidemic plaguing our communities,” he said. The United States imported $438 billion worth of goods from China in 2024, including cellphones, electronics, clothing, toys and all sorts of consumer goods, along with equipment and parts used by factories and repair shops.
Trump's tariffs will put pressure on American companies to find other suppliers to replace those Chinese goods, which accounted for more than 13 percent of total U.S. imports last year.
The additional 84 percent duty that China has so far imposed on American goods threatens U.S. exports to that country, which totaled about $143 billion last year.
That was about 7 percent of total U.S. exports in 2024 or about 9 percent if exports to Hong Kong are included.
The loss of those sales could hurt farmers in particular, since China is one of their top three export markets, along with Canada and Mexico. The United States exported more than $24 billion worth of agricultural products to China last year, which represented about 13 percent of total farm exports. A sharp drop in those sales could contribute to the growing U.
S. agricultural trade deficit, which USDA already has forecast at a record $49 billion in fiscal 2025. U.
S. farm exports to China plummeted during Trump’s first term to a low of $9.2 billion in 2018, less than half the level before he took office, as a result of his earlier trade war with China.
That led the administration to spend more than $20 billion to bail out the farm sector. Trump could try that again and also pursue a trade deal with Beijing, along the lines of the “Phase 1” deal he signed with President Xi in early 2020, Gresser said. Despite his tough rhetoric, his decision to invite a Chinese official to his inauguration suggests he is eager to strike a deal with China that he can trumpet, Gresser added.
Phelim Kine, Dan Desrochers and Ari Hawkins contributed to this report..
