China Gains Strategic Edge as Trump Softens Tariff Pressure Ahead of
Summit
As President Trump prepares to meet with
Xi Jinping, a trade war that once threatened to freeze commerce between the two
countries has given way to an uneasy truce.
·
As Trump meets Xi Jinping in Beijing, analysts say
China appears to have gained leverage in the trade confrontation.
Tariff Escalation and Retaliation
·
In February 2025, Trump imposed an additional 20%
tariff on Chinese imports over fentanyl-related concerns.
·
In April 2025, the U.S. announced “Liberation Day”
tariffs, including a 34% levy on Chinese goods.
·
The tariff war escalated rapidly:
o
U.S. tariffs on Chinese goods rose to 145%.
o
China retaliated with tariffs of up to 125% on U.S.
goods.
Rare Earths Became China’s Key Leverage
·
China shifted strategy by restricting exports of
rare-earth metals and magnets critical for:
o
Aircraft
o
Semiconductors
o
Automobiles
o
Defense equipment
·
China refines more than 90% of global rare-earth
supplies, giving Beijing major strategic influence over supply chains.
·
The restrictions disrupted global manufacturing and
pressured Washington into negotiations.
Temporary Trade Truce
·
By May 2025, both countries agreed to reduce
tariffs:
o
U.S. tariffs on Chinese goods fell to 30%.
o
Chinese tariffs on U.S. goods were reduced to 10%.
·
Trump later softened his tone, stating:
o
“We’re not looking to hurt China.”
Further Negotiations and Legal Developments
·
In October, China expanded export controls on
additional rare-earth elements.
·
Trump threatened another 100% tariff increase in
response.
·
China later resumed limited rare-earth shipments,
while the U.S. reduced fentanyl-related tariffs.
·
The U.S. Supreme Court subsequently ruled Trump’s
“Liberation Day” tariffs illegal, contributing to further tariff reductions.
Current Tariff Situation
·
According to Nomura, the average U.S. tariff on
Chinese imports now stands at around 22%.
·
China still faces higher tariffs than most
countries, but far below earlier threats.
China’s Trade Position
·
China recorded a record global trade surplus of
over:
o
$1.18 trillion in 2025.
·
Despite tariffs, China continues to maintain a
large trade surplus with the United States.
·
Chinese exports to third countries have also
increased, raising U.S. concerns about indirect access to American markets.
Possible Future Escalation
·
The White House may revive broader tariffs through:
o
Section 122 of the Trade Act of 1974
o
Section 301 investigations related to industrial
overcapacity and forced labor
·
Scott Bessent indicated that new tariff actions
could emerge later this year.
·
Trade analyst Steve Okun predicted tariffs on China
could rise again to 35% or higher.
Overall Assessment
·
China’s dominance in rare-earth processing has
strengthened its bargaining position in the trade dispute.
·
The current U.S.-China engagement appears focused
on stabilizing tensions ahead of the summit rather than resolving structural
trade disagreements.
[ABS News Service/13.05.2026]
President
Trump came into office vowing to punish trading partners he accused of ripping
off Americans. China was target No. 1, and he promised tariffs on Chinese goods
far steeper than those on any other country.
One
year later, the outcome is striking: China now faces roughly the same tariff
rate as everyone else. A year ago, Mr. Trump’s import taxes on Chinese goods
had climbed so high that trade between the two countries nearly froze and
Chinese officials mocked the standoff as “a joke.”
Some
Chinese goods still carry a set of tariffs left over from the first Trump
administration, including sector-specific duties on steel, aluminum
and other products. The average overall tariff on Chinese imports now stands at
around 22 percent, according to Nomura, the Japanese bank. That is higher than
the rest of the world, but far less than what Mr. Trump had threatened.
As
leaders from the world’s two largest economies meet this week, China appears,
at least for now, to have outmaneuvered the United
States. Three numbers help explain how the two sides got here and what could
come next.
125%
China’s peak retaliatory
tariff rate
Mr.
Trump vowed to “make China pay” in his second presidency.
He
didn’t waste any time. In February 2025, he imposed an additional 20 percent
tariff in an effort to force Beijing to curb the flow of fentanyl and its
chemical precursors into the United States. Then in April, on “Liberation Day,”
as Mr. Trump called it, he placed tariffs on nearly every country in the world,
including a 34 percent levy on China.
Other
countries rushed to negotiate, lobbying Mr. Trump and mounting charm offensives
to soften the blow. China, however, retaliated with tariffs of its own on the
United States, and the two sides traded ever-steeper duties.
When
Mr. Trump raised tariffs on Chinese imports to 145 percent, China responded
with a 125 percent tariff on American goods and vowed to “fight to the end.” Xi
Jinping, China’s top leader, warned publicly that “there are no winners in a
tariff war.”
Then,
Beijing reached for a different kind of weapon.
90%
The share of rare earths
refined in China
By
mid-April 2025, China and the United States were effectively under a mutual
trade embargo because of the extra-high tariffs they had imposed on each other.
China
switched gears, restricting exports of certain rare-earth metals and magnets
essential to aircraft, semiconductors and cars. While not all rare earths are
scarce, China refines more than 90 percent of the global supply and its share
is even higher for some of the most coveted varieties.
Beijing’s
strategy worked. By May, both sides were negotiating a truce. Mr. Trump lowered
tariffs on Chinese goods to 30 percent, while China, which imports far less
from the United States than it exports, cut its tariffs on American goods to 10
percent. “We’re not looking to hurt China,” Mr. Trump said at a White House
event after the détente.
Since
then, Mr. Trump appeared to soften his stance toward Beijing, said Deborah
Elms, head of trade policy at the Hinrich Foundation.
By
October, China was tightening its grip on rare earths again, expanding its
export controls and adding five more elements to its restricted list. Mr. Trump
responded by threatening another 100 percent tariff, calling Beijing’s move
“extraordinarily aggressive.”
Negotiators
rushed back to the table. China resumed some rare-earth shipments. In exchange,
the United States halved its fentanyl tariff, lowering overall tariffs on
Chinese goods to about 47 percent — a figure that would later come down even
more after the Supreme Court ruled in February that Mr. Trump’s “Liberation
Day” tariffs were illegal.
Mr.
Trump and Mr. Xi agreed to a yearlong pause on the most severe measures that is
set to expire later this year.
In
the months leading up to this week’s summit, the Trump administration largely
held its fire. “The marching orders seem to be: Don’t mess up our meeting in
May,” Ms. Elms said.
$1,185,077,690,000
China’s trade surplus with
the world
China’s
trillion-dollar trade surplus in 2025 hit a record, underscoring the enormous
gap that still separates Beijing and Washington on trade.
Even
with tariffs in place, China is running a large but narrower surplus with the
United States, selling more than it buys.
Chinese
factories also increased shipments to other countries, and some of those goods
may ultimately reach the American market, prompting some Trump administration
officials to accuse Beijing of seeking backdoor access to the United States.
Trade
experts say the current tariff rates are unlikely to last. The Supreme Court’s
ruling earlier this year dealt the administration a setback. The White House
responded by imposing a new 10 percent duty on all countries under a provision
known as Section 122 of the 1974 Trade Act, though those tariffs expire on July
24.
Treasury
Secretary Scott Bessent has indicated that the administration intends to revive
some of the struck-down tariffs by the summer, laying the groundwork for
broader duties through investigations into forced labor
and industrial overcapacity under a provision known as Section 301.
Steve
Okun, chief executive of APAC Advisors, a geopolitical consulting firm,
predicted the Trump administration would soon raise tariffs on China,
potentially to 35 percent or more.
Mr.
Trump, he said, “will need to be careful not to commit to taking 301 off the
table at the coming summit.”