In May, a major escalation took place in the long-standing United States-China trade conflict. Tariffs on Chinese goods exported to the U.S. plummeted in China, with average tariff rates declining from a mind-boggling 145% to 30%. This cut was one element in a broader trade deal between both countries agreed to relieve some trade pressure. These tariffs have never been increased since then from their original cut. This leaves the future of U.S.-China trade relations hanging in the balance.
As the situation evolves, Donald Trump’s ability to impose further tariffs is potentially facing constraints due to a landmark case pending before the Supreme Court. As far as the actual scope of tariffs, this case may reshape how broadly tariffs can be used going forward. Given all this uncertainty in the air, you’d think that Trump would be tentative about following through on another increase in tariffs on Chinese imports. He’s obviously intent on upping the ante in this fight.
Unchanged Tariffs and Ongoing Threats
Since May, the U.S. and China have navigated a complicated trade landscape since reducing tariffs. They’re hard at work figuring out their changing trade relations. Where the original agreement sought to ease future exchanges of goods by making shipping and transportation easier, Trump’s administration seems primed to do a 180. He has gone on the record with complaints about what he claims is a surprise trade aggression from China.
Retaliatory tariffs on Chinese goods rose to historic highs over the course of this trade war, indicating the depth and aggression of the trade war. The Trump administration was quick to respond in-kind with new tariffs on China. They instituted heavy tonnage fees on goods carried on Chinese-owned or -operated ships. This bold action was a sign of the administration’s hawkish spirit to protect American interests at all costs.
Trump’s latest threats to increase tariffs are being issued as disinformation is swirling around the idea that such trade aggression from China was without cause. He repeatedly insists that the United States has good reasons for doing what we do. North Dakota Democrat Sen.
China’s Counteractions
In reaction to these tariff policies of Trump’s, China has taken a hard line approach, rolling out retaliatory measures of their own against US exports. Most recently, China cut its tariffs on US exports from 125% to 10%. This latest move underscores China’s willingness to reach an accommodation while protecting its own economic interests.
Furthermore, China has put in place export controls on critical rare earth materials, which are used in growing sectors such as electronics and defense. This strategic play illustrates China’s ability to introduce smart and aggressive retaliation in response to tariffs by the Trump administration.
That back and forth exchange between the two countries is the latest example of how tenuous the economic ties between the two nations remain. With neither side willing to compromise, the specter of a dangerous escalation hangs heavy.
A Landmark Supreme Court Case
Both countries are still today struggling with the ramifications of trade tariffs. One important Supreme Court case may upend the trajectory of these negotiations. This case would severely undermine Trump’s tariff powers. That’s great and all, but it raises fundamental questions about the long-term viability of his approach to trade.
Recent months have largely seen tariff rollbacks on Chinese imports. At the same time, Trump’s administration is literally looking for new ways to tack on more fees. Instead of a maximum 145% tariff, an exemption for electronics from this minimum tariff was issued, lowering the electronics tariff to 20%. This exemption marks a positive step toward balancing economic interests with increased economic pressure on China.
Depending on how the Supreme Court rules, their decision could have sweeping implications for U.S.-China relations. If limitations are placed on Trump’s ability to impose further tariffs, it may force a reevaluation of strategies employed by both nations.