The US government is preparing to levy a new 7.5% tariff on certain Chinese goods, a measure aimed at addressing what it describes as China's industrial overcapacity. This move, if finalized, would escalate the total tariffs imposed during President Trump's second term to roughly 20%.
New Tariffs Ahead of Key Summit
Sources familiar with the discussions indicate that this proposed tariff increase comes just weeks before a critical summit scheduled between US President Donald Trump and Chinese President Xi Jinping next month in Washington on September 24. The exact tariff rate is still under negotiation, with one option being to announce a higher initial duty and then suspend a portion of it, effectively reducing it to 7.5%.
This initiative follows a Section 301 investigation launched by the Trump administration in March, targeting over a dozen major trading partners due to concerns about their excess manufacturing capacity. Officials are expected to release the findings of this investigation prior to the upcoming meeting between the two leaders.
Context of Previous Trade Actions and Legal Challenges
The planned 7.5% tariff would be in addition to a 12.5% tariff imposed in July on Chinese goods, which was justified by concerns over insufficient action on forced labor. China, while critical of the earlier tariff, did not retaliate, acknowledging an existing agreement to cap additional duties on its exports at 20%.
Both nations are also working towards extending their current trade pact, a one-year truce that is set to expire on November 10. The White House has cautioned that official tariff announcements will come directly from the administration, describing other reports as speculative.
The administration's trade policies, including the use of Section 301, are currently facing legal challenges. A coalition comprising 25 US states, including key economic players like New York, California, and Illinois, has filed a lawsuit. They allege that President Trump unlawfully utilized Section 301 to reintroduce tariffs that had previously been struck down by the US Supreme Court.
China has consistently urged Washington to maintain tariffs within the parameters agreed upon during previous trade consultations, underscoring the delicate balance of the ongoing economic relationship.