President Donald Trump recently announced that the import tax on goods coming from China will be drastically lowered. He asserted it won’t go to zero. Since the coronavirus crisis, tensions between the United States and China have reached new heights. In retaliation, China instituted its own reciprocal tariffs of 125% on U.S. goods.
Trump’s comments followed a ceremonial event marking the swearing-in of Paul Atkins as the chair of the Securities and Exchange Commission, where he acknowledged a positive trend in the stock market. He emphasized his commitment to negotiations with China, stating that the process would be a “slog,” but expressed optimism about future relations.
“We’re going to live together very happily and ideally work together,” – Donald Trump
His predecessors like Trump have promised to lower tariffs with little success. He’s done nothing to remove that starting 10% tariff on all Chinese goods. He highlighted his administration’s wish for other countries to cut their tariff rates on US exports. He further urged the elimination of non-tariff barriers that block U.S. exports.
Trump is apparently in the process of cutting deals with leaders of Japan, India, South Korea, the European Union, Canada and Mexico. Collectively they are betting on their mutual economic future in this fast changing trade environment. He reiterated that the U.S. is managing well in its dealings with China, positioning American economic strength as a critical component of these negotiations.
“It won’t be that high, not going to be that high,” – Donald Trump
Alongside all of these trade talks, Trump put the Fed under pressure to lower their benchmark interest rate. He was sending a signal that he, more than anyone, knows that he could unceremoniously fire Jerome Powell, Fed Chair, whenever he feels like it. He didn’t allude to any plans to do so anytime soon.
China’s reaction to the still continuing negotiations has been limited. The nation’s commerce ministry claimed, “China will never agree to any agreement that compromises the interests of China.” This quiet assertion captures the precarious game of chicken both countries are walking as they march into a thorny thicket of trade headwinds.
As the situation develops, White House Press Secretary Karoline Leavitt noted that “everyone involved wants to see a trade deal happen.” Perhaps the biggest challenge for Trump’s administration is managing what will be the biggest geopolitical story of the century—the U.S.-China relationship. His stated goal is to strengthen economic connections while addressing our own trade policy grievances at home and around the world.