President Donald Trump is considering a new 7.5% tariff on Chinese goods as his administration targets China’s excess industrial capacity while seeking to preserve a fragile trade truce with Beijing.
Trump Weighs 7.5% China Tariff.
Trump is weighing a 7.5% tariff on Chinese imports after a U.S. investigation into China’s industrial overcapacity, according to people familiar with the deliberations, reported AP News on Monday.
The potential tariff would be added to existing duties and is being calibrated to avoid disrupting a one-year U.S.-China trade truce or a planned meeting between Trump and Chinese President Xi Jinping in late September.
The administration argues that China is producing more goods than its domestic economy can absorb, prompting manufacturers to push exports into global markets at low prices.
China’s embassy in Washington said economic and trade issues should be resolved through bilateral talks and rejected the claim that China has a problem with excess capacity.
China Trade Surplus Fuels Tensions
The U.S. investigation was launched under Section 301 of the Trade Act of 1974, which allows the president to impose tariffs in response to unfair trade practices.
The move follows a Supreme Court ruling that struck down Trump’s earlier sweeping tariff strategy.
China’s manufacturing capacity in industries including autos, solar panels, steel and cement has drawn increasing scrutiny from trading partners.
China’s trade surplus reached nearly $1.2 trillion last year, as weaker domestic demand encouraged companies to expand overseas.
US-China Trade Tensions and Deals
Earlier this month, the Trump administration accused China of using third countries to evade U.S. tariffs, estimating the practice cost Washington $19 billion to $26 billion annually.
In May, Trump and Xi established the U.S.-China Board of Trade and U.S.-China Board of Investment to strengthen economic ties.
China also agreed to purchase at least $17 billion in U.S. agricultural products annually through 2028, while approving an initial purchase of 200 Boeing aircraft and restoring access for some U.S. beef and poultry products.
The two countries also discussed reducing tariffs and easing trade barriers, while Trump and Xi expressed optimism about bilateral relations.
China Move Amid Canada Tariff Escalation
Trump also threatened 50% tariffs on Canadian vehicles, auto parts and steel, escalating trade tensions after negotiations failed.
The dispute also threatened U.S. alcohol makers, whose exports to Canada had already plunged more than 70% after Canadian provinces removed American spirits from shelves.
Brown-Forman Corp. (NYSE:BF) (NYSE:BF) Canadian sales fell 59%.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Image via Shutterstock/ noamgalai
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