China Responds Calmly as Trump's New Tariffs Leave It in a Stronger Position

Despite threats from President Trump, the overall average weighted tariff on Chinese goods remained about the same, and is now lower than countries like Brazil and Canada.

1. China Refrains from Retaliation

· China issued a formal protest against the latest U.S. tariffs but did not impose retaliatory tariffs, marking a departure from previous rounds of the U.S.-China trade war.

2. New Tariff on China Limited to 12.5%

· The Trump administration imposed a 12.5% tariff on Chinese goods under the latest Section 301 action.

· This is significantly lower than the 145% tariff threatened during the "Liberation Day" tariff announcements in April 2025.

3. Overall U.S. Tariff on Chinese Goods at 23.1%

· Including tariffs imposed during Trump's first presidency and subsequent measures, the average weighted U.S. tariff on Chinese imports is now 23.1%.

· This effective tariff rate is lower than the rates currently applied to imports from Brazil and Canada.

4. China Confident Tariffs Have Reached Their Ceiling

· Chinese officials believe U.S. tariffs are unlikely to rise substantially further.

· Their confidence stems from a trade understanding reached during negotiations with U.S. officials and reinforced by a handshake agreement between President Trump and President Xi Jinping in October.

5. Analysts Expect Limited Economic Impact

· Analysts at Guojin Securities stated that the latest tariff increase would have only a limited impact on China's economy.

· The overall effective tariff rate rose only marginally from 21.9% to 23.1%.

6. Tariffs Form Part of Broader Section 301 Strategy

· The latest tariffs are part of the Trump administration's wider Section 301 initiative targeting more than 80 trading partners.

· The administration alleges these countries have failed to adequately address forced labour practices.

7. More Tariffs Expected

· Additional Section 301 tariffs are expected following investigations into alleged unfair manufacturing practices, including excess industrial capacity.

· China remains one of the countries under review.

8. New Tariffs Below Earlier "Liberation Day" Levels

· The administration is not expected to reintroduce tariffs approaching the levels announced under the April 2025 "Liberation Day" measures.

· Those earlier tariffs were subsequently struck down by the U.S. Supreme Court.

9. Chinese State Media Criticises U.S. Policy

· Chinese state media described the latest measures as "America's never-ending tariffs."

· It accused Washington of creating new justifications to continue imposing tariffs.

10. Foreign Ministry Adopts Restrained Tone

· China's Foreign Ministry reiterated its opposition to unilateral tariffs.

· However, officials declined to announce any retaliatory measures.

11. Trade Experts See an Informal Tariff Cap

· Trade analysts believe both governments have an informal understanding that additional tariffs on China will not exceed roughly 20% beyond current levels.

· Such a ceiling is intended to preserve the existing trade truce.

12. Further Tariff Increases Could Trigger Retaliation

· Experts warn that any additional tariff increase beyond approximately 7.5 percentage points could jeopardize the current agreement and provoke Chinese countermeasures.

13. Previous Negotiations Established the Framework

· The tariff understanding reportedly emerged during trade negotiations held in Kuala Lumpur.

· President Trump and President Xi later reaffirmed the arrangement during a meeting in South Korea.

14. Differences Over Tariff Discussions

· President Trump stated that tariffs were not discussed during his May meeting with President Xi in Beijing.

· China's Commerce Ministry disputed this, stating that both sides held extensive discussions on tariffs and that Washington should honor its commitments.

15. Rare Earths Strengthen China's Bargaining Position

· China has strengthened its negotiating leverage by tightening controls over rare earth exports.

· Rare earth materials are essential for:

o Electric vehicles

o Advanced electronics

o Defence equipment

o Aerospace manufacturing

16. China Believes Major Tariff Escalation Is Unlikely

· Chinese trade experts expect no major across-the-board tariff increases during the remainder of President Trump's current term.

· Beijing believes both sides now have incentives to maintain tariff stability.

Key Takeaway

China has responded cautiously to President Trump's latest tariff measures because the new duties are far lower than previously threatened levels and remain within what Beijing considers an informal tariff ceiling negotiated with Washington. Confident in its leverage—particularly through control of rare earth supply chains—and expecting limited further escalation, China has chosen restraint over retaliation while seeking to preserve the current trade truce.

[ABS News Service/25.07.2026]

China’s response to President Trump’s new round of tariffs was muted. Beijing issued a statement in protest, but unlike in past rounds of tit-for-tat, it did not lob a counter.

China has cause to be low key. It has so far emerged from the trade war with the United States in a better position. One year ago President Trump threatened tariffs on Chinese goods as high as 145 percent. The levies that Mr. Trump imposed on Chinese goods on Friday were just 12.5 percent.

Factoring in earlier tariffs, including those from Mr. Trump’s first presidency, the overall average weighted tariff on Chinese goods is now 23.1 percent — lower than Brazil or Canada.

Chinese officials are also confident that tariffs will not rise much further, after securing an assurance of a truce from U.S. trade negotiators. That agreement, which trade experts have placed at about a 20 percent cap, was later sealed with a handshake between China’s top leader, Xi Jinping, and Mr. Trump last October.

The new tariffs will “have a limited impact on China at present,” according to analysts at Guojin Securities, a financial firm in Chengdu, China, who calculated the new overall tariff rate. The rate was previously 21.9 percent.

The tariffs imposed on China are part of Mr. Trump’s broader effort to transform global trade. On Friday, the administration issued tariffs on more than 80 trading partners over claims of failing to pass or enforce laws banning forced labor. The new tariffs, which were between 10 percent and 12.5 percent, replaced a global 10 percent tariff as it expired.

The White House issued the duties under Section 301 of the Trade Act of 1974, which allows the president to impose tariffs on foreign countries that engage in unreasonable or discriminatory trade practices. More tariffs are expected in the coming weeks, after an administration proposal to offset what the White House calls unfair practices in several countries’ manufacturing sectors — including China.

None of those tariffs are expected to top those announced by Mr. Trump under an international emergency law on April 2, 2025, which he termed “Liberation Day.” The Supreme Court struck down Mr. Trump’s use of the law to impose tariffs in February.

On Friday, Chinese state media called the Trump administration’s policy “America’s never-ending tariffs,” and added that Washington “has found a new pretext for abusing tariffs.”

The foreign ministry showed more restraint. At a regular news conference on Friday, a spokesman said China opposed “all forms of unilateral tariffs,” but he did not respond when asked whether the country would retaliate.

China may take comfort in a perceived promise by Mr. Trump to cap tariffs, trade experts said.

“My understanding is that there is a ‘wink, wink, nod, nod’ on 20 percent additional tariffs and through these 301 investigations, any findings on China would conveniently not exceed that,” said Wendy Cutler, a senior vice president at the Asia Society Policy Institute.

Anything more than a 7.5 percent tariff on China in the next round would risk the fragile truce and invite retaliation, she added. Mr. Trump said Mr. Xi will visit Washington in September.

Trade negotiators set that ceiling last year during U.S.-Chinese trade talks in Kuala Lumpur, the Malaysian capital. Mr. Trump and Mr. Xi shook on the terms of a trade deal in South Korea several days later, agreeing to a tariff truce for one year.

During meetings with Mr. Xi in Beijing in May, Mr. Trump said the two did not discuss tariffs.

But China’s commerce ministry pushed back on his comments, saying in a statement that the United States and China had “engaged in in-depth discussions on tariffs.” The ministry added that it hoped Washington would “honor its commitments” and ensure that the U.S. tariff levels on Chinese goods would “not exceed the level stipulated” during talks in October.

Trade experts said Beijing was drawing a line on tariff rates after a year of standing up to Washington, matching each of Mr. Trump’s ever-higher tariffs with its own and tightening control over rare-earths exports. China dominates the global supply chains for rare earths, materials that are critical to everything from fighter jets to motors in car seats.

“My personal understanding is that during the remainder of Trump’s term, there probably won’t be sharp, comprehensive tariff increases again,” said Tu Xinquan, dean of the China WTO Institute at the University of International Business and Economics in Beijing.