US weighs 7.5% tariff on China as trade truce holds, sources say
The United States is considering a new tariff of 7.5% on Chinese goods, according to three people familiar with the matter. The move is intended to penalise what Washington describes as China's practice of flooding global markets with underpriced products.
The people, who spoke on condition of anonymity to discuss internal deliberations that are still being finalised, said President Donald Trump could still change his mind. The proposed rate is seen as calibrated to avoid endangering the one-year trade truce between Washington and Beijing, or a planned White House meeting between Mr. Trump and Chinese President Xi Jinping expected in late September.
The deliberations follow a Supreme Court decision earlier this year that struck down Mr. Trump's plan for sweeping, high-tariff measures not seen since the 1930s. After that ruling, the administration announced in March that it was launching formal investigations into excess industrial capacity and forced-labour regulations in China and other nations.
The China probe was initiated under Section 301 of the Trade Act of 1974, which permits the president to levy tariffs against countries that discriminate against U.S. companies or commerce. It is unclear whether the administration is nearing decisions in its investigations of other economies, including the European Union, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, South Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan and India.
A new tariff on China would come on top of existing levies of 10% to 12.5% imposed last month on 60 economies that the Trump administration accused of failing to enforce a ban on goods produced with forced labour. Many countries, including China, protested that move, which took effect just as temporary tariffs expired following the Supreme Court ruling.
China has pushed back against claims of overcapacity, anticipating that the United States would soon release results of its probe and impose new tariffs. In a recent report titled "China's Position on the So-called Excess Capacity Issue," the Ministry of Commerce said China has never sought a large trade surplus. Yet slowing domestic demand has prompted Chinese companies to expand into overseas markets. Surging exports pushed China's trade surplus to a record of nearly $1.2 trillion last year.
The tariff deliberations come as the U.S. Treasury Department on Monday warned countries trading with Iran that new secondary sanctions are being prepared. China is Iran's biggest trade partner. Treasury Secretary Scott Bessent's announcement provided little detail, but Washington has promised to increase pressure on Iran's economy as the U.S. and Israeli war against Iran nears the six-month mark.
The White House and the U.S. Trade Representative's office did not respond to requests for comment on the tariff deliberations, which Bloomberg News reported earlier on Monday. The Chinese embassy in Washington also did not immediately respond to a request for comment.
The people familiar with the deliberations stressed that the tariff plan is not final and could be altered before any announcement. The move reflects a calibrated effort to address trade imbalances while maintaining diplomatic engagement with Beijing, according to analysts.
