Former President Donald Trump is reportedly considering a major policy shift in his ongoing trade war with China, as the impact of escalating tariffs begins to weigh heavily on the U.S. economy.
According to The Wall Street Journal, the Trump administration is exploring a significant reduction in tariffs on Chinese imports, potentially lowering them to between 50% and 65%. The move comes amid growing concerns that the current trade policies—characterized by steep import duties—are doing more harm than good to the world’s largest economy.
In a statement to reporters on Tuesday, Trump indicated that tariffs on Chinese goods would “come down substantially.” This hint of a policy reversal triggered a surge on Wall Street, with the Nasdaq index climbing as much as 4% during trading.
Potential Policy Reversal Marks Shift in Trade Strategy
The U.S. had previously imposed tariffs of up to 145% on Chinese goods in an attempt to pressure Beijing into trade concessions. In response, China implemented retaliatory tariffs of 125% on U.S. products, leading to a near-collapse in bilateral trade.
If implemented, a halving of these tariffs would mark a significant policy reversal from the White House’s prior stance, and could be perceived as an acknowledgment of the economic fallout triggered by the trade war.
Recent data supports these concerns. A key economic survey indicates that U.S. business activity has dropped to a 16-month low, and trade volumes between the two nations are plummeting.
Treasury Secretary Bessent Advocates ‘Deeper Collaboration’
Scott Bessent, Treasury Secretary under Trump, has laid the foundation for this potential shift by promoting a message of global cooperation. Speaking at the Institute of International Finance in Washington, Bessent remarked, “America First does not mean America alone,” emphasizing the need for “deeper collaboration and mutual respect among trade partners.”
He added that the goal is to “restore fairness to the international economic system” through continued U.S. leadership in institutions like the IMF and World Bank.
Social Media Reacts: ‘Trump Chickened Out’
The phrase “Trump chickened out” trended on Chinese social media platform Weibo, following the president’s remarks about a potential tariff reduction. Despite the shift in tone, Bessent reaffirmed that the administration still expects substantial economic reforms from Beijing.
“China’s model of exporting its way out of economic troubles is not sustainable,” he stated. “It harms both China and the global economy. We want to support a transition toward domestic consumption and balanced trade.”
At a private event hosted by JP Morgan, Bessent reportedly described the current tariff levels as an effective “embargo” and predicted that both nations would soon begin rolling back tariffs. “No one believes 145% and 125% tariffs are sustainable,” he said.
Tariff Impact Deepens: Trade Volumes Collapse
The economic consequences of the tariff war are becoming increasingly evident. Container shipments from China to the U.S. have plunged by over 60% in the weeks following Trump’s tariff announcements, according to Flexport CEO Ryan Petersen.
German shipping firm Hapag-Lloyd also reported a 30% drop in shipments bound for the U.S., with clients canceling orders amid trade uncertainty.
A recent report by S&P Global further illustrates the strain on the U.S. economy. Chief Economist Chris Williamson noted that manufacturing is stagnating and services are weakening, with declining exports—particularly in travel and tourism—exacerbating the slowdown.
“Economic uncertainty, supply chain disruptions, and weakened global demand are offsetting any positive effects of tariffs,” Williamson said.