China has further raised the stakes on trade by demanding that the United States go all the way and drop the tariffs entirely. These tariffs were enacted in the Trump administration. This latest demand comes on the heels of six rounds of tariff increases that have disrupted bilateral imports and exports between the two countries. It’s a developing story, but one where both countries seem determined to find their way through a complicated web of international trading partner relations.
In early April, former President Donald Trump levied an extra-long-range tariff – a whopping 54% – on numerous products of Chinese origin imported into the U.S. This retributive policy was intended to defend US manufacturing and support an aggressive UK-US trade imbalance. The tariffs did not end with a modest increase on the original amount; after that they were increased again to a shocking 145%. In retaliation, China placed heavy tariffs on American products. They began with a 34% tax, which quickly shot up to 84% and then ultimately exploded to 125%. These new, higher levies only officially went into effect this past Saturday, making an already trade environment that much tougher to navigate.
As these tensions continued to heighten, the Trump administration intervened. They reversed themselves on several concessions by exempting particular technological topics, like computerized chips, smartphones so that you can computers. This decision released a collective sigh of relief from big tech. It further helped restore confidence among consumers concerned about increasing costs of must-have devices. Trump announced a 90-day pause on a host of global tariffs, which was seen as an attempt to de-escalate trade hostilities.
China’s eye-catching response to these developments was guardedly optimistic, with the US exemptions characterized by Beijing’s commerce ministry as a “small step.” They stressed the fact that Beijing is currently in the middle of evaluating the effect of the exemptions. In return, they pushed for a complete repeal of what they refer to as “reciprocal tariffs.”
“We call on the US to completely cancel the wrong practice of ‘reciprocal tariffs’ and return to the right path of mutual respect,” – China’s commerce ministry
The broader context illustrates longstanding trends in US-China trade relations. Gradually, Chinese authorities have sounded alarm bells. They will fight to the last if the US keeps goading them into a tariff or trade war. In the other camp, US Trade Representative Jamieson Greer suggested there is no short-term intention to shift course on the tariff offensive.
The future of these negotiations is deeply uncertain as both countries will be forced to weigh their long-term economic goals with short-term domestic pressures. Given the fragility of the global economy, the consequences of these tariffs may ripple outward to benefit or harm trade relations around the world.