Treasury Secretary Scott Bessent announced a welcome pause in the Trump administration’s trade wars Sunday. A preliminary agreement with China will reduce U.S. tariffs on most Chinese imports from 145% to 30%, with a reciprocal reduction on U.S. exports to China from 125% to 10%. The reprieve is set to last only 90 days, however, and there is still worry that higher tariffs could snap back if negotiations fall apart before a long-term agreement is reached. Still, it is a positive step. Bessent is taking a reasoned lead, and one hopes that the progress he has achieved so far will continue.
Bessent’s announcement came near the end of spirited negotiations that began in Switzerland on Friday, and the pace of those talks suggests that tariffs were inflicting as much pain on the Chinese economy as they have been inflicting on our own. “We concluded that we have a shared interest,” Bessent explained. “The consensus from both delegations is that neither side wanted a decoupling.”
It does not appear that President Donald Trump won any concessions from China apart from the lowering of the retaliatory tariffs. The 10% levy on all goods from all countries remains in effect, as does an additional 20% tariff supposedly targeted at China’s failure to prevent fentanyl precursor chemicals being shipped into the United States. That comes to a base 30% tariff on all Chinese goods with additional tariffs on steel, aluminum, and automobiles.
Bessent says he is also seeking Chinese concessions on currency manipulation and state subsidies for manufacturing, but there is no indication of progress on those. Bessent is seeking commitments from China to buy more American farm products; these are still being negotiated, but nothing has been finalized.
Sunday’s agreement leaves the U.S. where we were in March, before Trump’s April 2 “Liberation Day” press conference. The S&P 500 index has now fully recovered from its post-Liberation Day fall, and the Dow Jones Industrial Average is 10% higher. If the 30% tariff rate holds past the agreed-to 90 days, it would yield about $130 billion in revenue each year that, like any tax hike, would be felt by consumers generally and manufacturers that use Chinese inputs. (The real impact would probably be closer to $100 billion as American importers switched to other suppliers to avoid the cost of the tariffs.)
THE FISCAL IRRESPONSIBILITY OF MODERATE REPUBLICANS
All this assumes that Trump’s tariff regime can survive scrutiny by federal courts as plaintiffs, including the state of California, have sued to block them, claiming the president lacks the necessary legislative authority to implement them without input from Congress. Those suits continue, and with 30% tariffs in place, and the threat of higher tariffs snapping back any time, the plaintiffs will have their arguments heard just as this 90-day pause is ending.
Trump’s trade war with China, and with the rest of the world, has so far been more apparent than substantive. His China deal, like his deal with the United Kingdom announced a few days earlier, merely returns us to a pre-April status quo. They have done this while increasing uncertainty in an already unstable economy. Until Congress acts to retake tariff powers it transferred to the executive branch, or a federal court holds that Trump has acted beyond the authority Congress gave him, uncertainty will continue.
This article was originally published at www.washingtonexaminer.com
