Trump Administration Considers Major Tariff Cuts on China Amid Trade War De-Escalation Talks

In a surprising turnover, Trump Administration Considers Major Tariff Cuts on China Amid Trade War De-Escalation Talks. In a move that could reshape theongoing U.S.-China trade war, President Donald Trump has signaled openness to significantly reduce tariffs on Chinese imports. The potential rollback comes amid growing economic pressure and market instability fueled by the escalating tariff exchange between the world’s two largest economies.

Trump Administration Considers Major Tariff Cuts on China Amid Trade War De-Escalation Talks

Signs of a Softer Stance

Trump, from the Oval Office, speaking to reporters said that the present 145% tariffs on Chinese goods were “very high” and if a trade agreement with China is reached the tariff would “come down substantially.” Suggesting a willingness to compromise while maintaining some level of economic protectionism, he emphasized, “But it won’t be zero.”  

Scott Bessent, the Treasury Secretary, echoed Trump’s sentiment, admitting that the current tariff rates are unsustainable. Bessent highlighting the need for “deeper collaboration” and a shift from “America first” to “America with allies,” hinting at a broader strategy of rebuilding international economic relationships.

Proposed Tariff Reductions

The Wall Street Journal reported that the White House is actively considering cutting tariffs on Chinese imports to somewhere between 50% and 65% which is a remarkable drop from the existing 145% tariff. This change, if put into practice could help defuse tensions between Washington and Beijing.

The discussions, by sources close to the matter, described as “fluid” suggests that multiple policy paths are under review. A tiered system, is one option that is similar to a proposal by a House committee on China. This option imposes a 35% levy on non-sensitive goods and at least 100% on items deemed strategic to national security. This phased approach would unfold over five years and potentially pave the way for a long-term resolution.

White House spokesperson Kush Desai, despite the speculation, cautioned that unless announced directly by the President no decisions should be considered final.

Uncertainty Surrounds Negotiation Timeline

While, striking a “fair deal” with China, President Trump remains publicly optimistic, and little clarity has been offered by the officials about when or how formal negotiations will begin. Bessent admitted that talks had not yet started and that both sides appear to be waiting for the other to initiate the process.

Bessent said, “This is the equivalent of an embargo,” yet he warned that the ongoing trade freeze is detrimental to both nations. Any future deal, Bessent stated, would require significant structural changes to China’s economic model, including rebalancing trade to favor U.S. manufacturing.

For his part, Trump, downplayed the need to “play hardball” with Chinese President Xi Jinping. Trump avoided touching on politically sensitive topics like the origin of COVID-19 in recent comments, a move seen as an attempt to keep the diplomatic channel open.

China Responds with Caution

China’s initial response has been measured. The Foreign Ministry emphasized that in any future negotiations, mutual respect and equal footing is important. A spokesperson said calling for sincere dialogue, “The U.S. cannot say it wants to reach an agreement with China while exerting extreme pressure.”

“The door for talks is wide open,” foreign ministry spokesman Guo Jiakun reaffirmed, but warned that if provoked China would “fight to the end.” Beijing already has imposed retaliatory tariffs of up to 125% on U.S. imports.  Beijing has been actively exploring alliances with third-party nations to counter U.S. economic pressure.

Impact on Global Markets

Wall Street responded positively to the news of potential tariff reductions. In mid-morning trading, the S&P 500 index surged approximately 3%, as investors welcomed the prospect of a de-escalation. The volatility of recent weeks had been fueled by fears of a prolonged trade standoff and recession risks.

However, Germany’s Hapag-Lloyd, major shipping firms have already reported significant losses. 30% of U.S.-bound shipments from China, the company noted, have been canceled due to the high tariff environment.

The International Monetary Fund (IMF) stated that continued tariff escalations could slow global economic growth and increase sovereign debt burdens worldwide.

Political and Economic Ramifications

The potential easing of tariffs, beyond the immediate economic stakes, carries significant political weight. Trump’s softening tone, some analysts believe, is aimed at calming financial markets and reassuring investors. Others, like political science professor Joseph Grieco, of Duke University, warns that the President may be preparing to offer China a deal that fails to resolve core economic grievances.

A rushed or unbalanced agreement, Grieco cautioned could leave key U.S. industries vulnerable, while allowing China to continue policies that undermine fair competition. He stated, “Trump may give away too much, too soon, just to boost the markets.”

Meanwhile, as the White House weighs its next steps, it remains unclear whether this is a strategic shift in trade policy or a temporary pivot driven by political calculations.

For now, the world watches and waits, markets, industries, and governments alike, as two economic giants’ inch closer to what could be a historic trade resolution.

Also Read: US-China Trade Deal: Tariffs Slashed by 115% in Historic 90-Day Agreement to Ease Tensions

Also Read: In trade war with the US, China holds a lot more cards than Trump may think − in fact, it might have a winning hand