**Washington, DC:** The Trump administration is reportedly considering significant reductions in tariffs on Chinese goods to ease trade tensions. Potential new tariff structures and talks aim to stabilise markets and foster an agreement, despite challenges with other trading partners and EU resistance.
Since the announcement of tariff increases on Liberation Day, the White House has been actively adjusting its tariff rates and their application, as markets have reacted predominantly negatively. The administration under President Donald Trump initially imposed particularly severe tariffs on Chinese imports, signalling China as the primary focus in his trade strategy. Concurrently, trade negotiations commenced with other international partners, with tariffs being employed as a tool to isolate Beijing economically.
However, recent developments suggest a possible shift in this approach. The Wall Street Journal has reported that the Trump administration is contemplating a significant reduction of its elevated tariffs on Chinese goods, in some cases by more than half. These considerations aim to ease tensions with Beijing that have disrupted global trade and investment flows. Although the President has not finalised any decisions, discussions remain fluid with multiple options under review. One senior White House official indicated that tariffs on China might be reduced to a range between roughly 50% and 65%. Another proposed strategy involves a tiered tariff system similar to one suggested by a House committee last year: a 35% levy on goods deemed non-threatening to national security and tariffs of 100% or more for items seen as strategically important to the United States. This proposal also includes phased implementation over five years.
President Trump himself acknowledged on Tuesday that a 145% tariff rate on Chinese imports is “very high” and stated that while tariffs would be lowered following trade negotiations, they “won’t be zero,” emphasising that tariffs were originally non-existent prior to these trade tensions. Previously, his comments implied maintaining high tariffs throughout negotiations, but this apparent readiness to reduce rates in advance may reflect a strategic move to facilitate dialogue.
This potential tariff rollback comes after China indicated willingness to negotiate only under terms absent continued threats from the White House, according to the Wall Street Journal. Observers interpret the tariff reduction signalling as a gesture to allow Chinese President Xi Jinping to engage in talks without losing face.
Adding to this diplomatic overture, Treasury Secretary Scott Bessent expressed optimism about a U.S.-China agreement, stating at the Institute for International Finance that “there is an opportunity for a big deal here.” He explained the complementary economic needs of the two countries: with the U.S. focusing on increasing manufacturing and exports, and China aiming to shift towards greater consumption, suggesting a mutual benefit if both nations work together.
Despite this promising tone with China, the move has implications for the White House’s broader trade agenda, which included efforts to isolate China economically through tariffs. This shift may weaken the United States’ leverage in negotiations with other trading partners, potentially complicating efforts to secure favourable terms elsewhere. Nonetheless, the current market response appears positive; U.S. stocks have rallied over consecutive days following softened rhetoric on both China and Federal Reserve policies.
Meanwhile, the European Union has responded firmly on its own trade policies. The EU’s economy commissioner, Valdis Dombrovskis, told the Wall Street Journal that the bloc will not renegotiate its value-added tax (VAT) or agricultural subsidies as part of any trade discussions with the United States. He communicated this position to Treasury Secretary Bessent prior to the announcement of the reciprocal tariffs. This stance indicates resistance within the EU to U.S. demands linked to tariff negotiations, signalling potential hurdles in strengthening transatlantic trade relations.
The overall picture points to an evolving but uncertain U.S. trade policy. The administration’s recent openness to tariff reductions on China may be aimed at stabilising markets and securing domestic support, but also reflects the complex challenges in balancing trade negotiations on multiple fronts. It remains to be seen how coherent the overall strategy will be and what further changes might arise as talks progress.
Source: Noah Wire Services
