Trump Considers Tariff Reduction to Reach a 'Fair Deal' on Trade with China

What Happened?

The Trump administration is considering plans to reduce tariffs on China to reach a 'fair deal' on trade.

It’s a position that many say now appears to change course.

President Donald Trump told White House reporters Wednesday, that the U.S. is actively talking to Chinese leaders to reach an agreement on tariffs that have stirred up much tension.

The softer tone with China comes after the two sides went tick-for-tack, which has rattled the global markets, increasing risks of a 2025 recession.

Trump said he's not seeking to play 'hardball' with Beijing and that imposed tariff measures will eventually 'come down substantially.'

'Everyone's going to be happy, but we're no longer going to be the country that's ripped off by every country in the world,' Trump said.

Although the president hasn’t made a final determination, Treasury Secretary, Scott Bessent, said Trump hasn’t offered to take down U.S. tariffs on China on a unilateral basis.

Bessent adds, the U.S. is currently involved in trade negotiations with about 100 countries, in addition to China.

Why it Matters

Trump’s unpredictable tariff moves have caused the International Monetary Fund (IMF) to lower its 2025 projections for U.S. growth to 1.8%, compared to a 2.8% expansion in 2024.

The agency stated that the U.S. effective tariff rate surged past levels reached during the Great Depression, while counter-responses significantly spiked the global rate.

Lower consumer confidence ratings and consumption indicators were additional factors IMF’s chief economist, Pierre-Olivier Gourinchas, pointed out.

The University of Michigan Surveys of Consumers recently revealed its Consumer Sentiment Index plunged to the second-lowest reading on record dating back to 1952.

Experts stated that demand in the U.S. was already softening, reflecting greater trade policy uncertainty.

Trump heavily criticized Federal Reserve Chair, Jerome Powell, after reiterating frustrations that interest rates are not being cut quickly enough.

He pointed to the European Central Bank's expectations to cut interest rates for the seventh time as a basis for the Fed to make a move.

Powell announced that the central bank will 'wait for greater clarity' before considering such cuts.

Trump suspended universal tariffs for 90 days and maintained a 10% blanket duty on almost all U.S. imports.

Automotives, steel, and aluminum levies of 25% were also kept in place.

How it Affects You

Some believe Trump's latest actions reflect a possibility of addressing concerns of increasing inflation and slowing U.S. growth.

Countries like China have hiked their levies to 125% on U.S. imports, effectively shutting out the U.S. in a major trade escalation.

The U.S. aims to slash tariffs on Chinese imports from a baseline rate of 145% to 50%-65%, according to reports.

It's a potential attempt to bring the world’s two largest economies back on track to re-establish their trade ties and insert balance globally.