White House considers slashing China tariffs to de-escalate trade war

One senior White House official said the China tariffs were likely to come down to between roughly 50 per cent and 65 per cent, although President Trump hasn’t yet made a final decision.

Donald Trump and Xi Jinping. Picture: AFP

The Trump administration is considering slashing its steep tariffs on Chinese imports — in some cases by more than half — in a bid to de-escalate tensions with Beijing that have roiled global trade and investment, according to people familiar with the matter.

President Trump hasn’t made a final determination, the people said, adding that the discussions remain fluid and several options are on the table. One administration official said Trump wouldn’t act unilaterally and would need to see some action from Beijing to lower tariffs.

One senior White House official said the China tariffs were likely to come down to between roughly 50 per cent and 65 per cent. The administration is also considering a tiered approach similar to the one proposed by the House committee on China late last year: 35 per cent levies for items the US deems not a threat to national security, and at least 100 per cent for items deemed as strategic to America’s interest, some of the people said. The bill proposed phasing in those levies over five years.

“President Trump has been clear: China needs to make a deal with the United States of America. When decisions on tariffs are made, they will come directly from the president. Anything else is just pure speculation,” White House spokesman Kush Desai said.

US businesses are scrambling to adjust to fast-changing trade policies. Picture: AFP

Later on Wednesday, Treasury Secretary Scott Bessent told reporters that Trump hasn’t offered to take down US tariffs on China on a unilateral basis, Bloomberg News reported.

Trump said Tuesday he was willing to cut tariffs on Chinese goods, saying the 145 per cent tariffs he imposed on China during his second term would come down. “But it won’t be zero,” he said. The development was welcomed news to investors who had been spooked by the White House’s aggressive moves in recent weeks.

China on Wednesday signalled it was open to trade talks with the US, though Beijing warned it wouldn’t negotiate under continued threats from the White House. In China’s policymaking circles, Trump’s comments Tuesday were viewed as a sign of him folding, people who consult with Chinese officials said.

Even if Trump decides to lower some tariffs on Chinese imports by half, that level would still mean the US markets would be all but closed to many Chinese makers of electrical machinery and equipment and other products. Some analysts have estimated that trade between the two countries could dry up within months at such a high level.

Some people close to the White House said Trump has plenty of room to lower the China tariffs and still work toward his administration’s goal of decoupling the US from the world’s second-largest economy. “It would be kind of a pressure valve release without actually doing anything,” one of the people said.

The expressions of openness to a deal from both sides represent a shift from much of the past month, as the world’s two largest economies exchanged reciprocal-tariff increases and testy words, helping push stock markets around the world to their worst weeks in many years.

The administration had planned to use continuing tariff negotiations to pressure US trading partners to limit their dealings with China, The Wall Street Journal previously reported. Still, Bessent has said there is room for talks on a potential trade deal between the US and China. Such negotiations would have to involve Trump and Chinese leader Xi Jinping, though the two haven’t talked since Trump regained the White House.

Treasury Secretary Scott Bessent at the Institute of International Finance Global Outlook Forum in Washington on Wednesday. Picture: AP /Jacquelyn Martin

As trade tensions have spiralled in recent weeks, Trump himself has indicated that he would like Xi to call him. Trump officials have also suggested to Chinese diplomats that Foreign Minister Wang Yi reach out to Secretary of State Marco Rubio, according to people familiar with the matter. So far, Beijing has refused to engage on either front.

A delegation of senior Chinese officials including Finance Minister Lan Fo’an and the governor of the People’s Bank of China, Pan Gongsheng, are in Washington this week for the spring meetings of the International Monetary Fund and World Bank.

So far, they haven’t scheduled any meetings with the administration and have scheduled to leave Washington Thursday, according to people familiar with the matter. But that can change if they get meetings with administration officials, the people said.

Wall Street Journal