Trump’s China deal makes sense. How he got here doesn’t.
Summary
The president’s tactics undercut his own rationales, while treating China better than allies.
With the deal announced after a weekend of negotiations, the U.S.’s effective tariff on China will be 39%, including levies in place before President Trump took office, according to Evercore ISI.
That is the highest on any major country, and much more than the 8% effective tariff Britain faces after its own deal last week. (The effective tariff is less than the 10% headline tariff because of exemptions.)
China’s agreement is technically a 90-day pause on higher tariffs, whereas Britain’s is the framework of a final deal. Still, for now they represent the ceiling and floor.
That China should be the ceiling makes sense. It is a geopolitical adversary that has built up massive industrial overcapacity with which to flood global markets, drive competitors out of business and dominate key technologies. There is a bipartisan consensus that the U.S. dependence on Chinese supply chains is dangerous and needs to be broken.
But the 145% tariff going into the weekend’s negotiations was overkill, the “equivalent of an embargo," Treasury Secretary Scott Bessent said Monday. “We do not want a generalized decoupling from China."
Whether or not it’s called decoupling, the current tariffs, if they stay, will accelerate the exodus of suppliers from China that began with tariffs Trump imposed in his first term and augmented by President Joe Biden. Other Trump initiatives reinforce that thrust, including provisions in last week’s deal with the U.K. to penalize the transshipment of Chinese goods through third markets to the U.S., and a crackdown on the export of advanced artificial-intelligence semiconductors.
Still, if Monday’s deal is a logical destination for Trump’s China policy, the journey there has been anything but logical. Trump’s tactics regularly undercut his own rationales, while treating China better in some ways than many allies.
His original “reciprocal" tariffs announced April 2 were meant to punish countries in proportion to their trade deficits with the U.S. Thus China, at 34%, got one of the highest of major economies. Britain got the minimum 10% “universal" tariff. Hitting Britain, a stalwart ally with open markets, with any tariff would have been unimaginable before this year. And yet it officially bears the same 10% reciprocal tariff as China, though it ran a $12 billion deficit with the U.S. last year while China ran a $295 billion surplus.
True, China’s 10% is on top of the 20% put in place a few months earlier. But that 20% is officially tied to China’s role in the flow of fentanyl into the U.S. Trump officials say China has shown readiness to act on that problem. Yet Canada and Mexico, who have already acted, are being hit with more, at 25%.
Another inconsistency: Trump promised to ratchet up tariffs further on countries that retaliate. China did, and Trump responded by eventually jacking his reciprocal tariff up to 125%. Now, he has slashed it to 10%.
That wasn’t because of concessions from China, but the mounting domestic cost. He backed off his reciprocal tariffs on most countries except China when the stock and bond markets took fright, and now has backed off most of his tariffs on China amid warnings of empty shelves, plunging container traffic and small-business failures.
There’s an irony here. Dependence on China has long been flagged as a potential national-security vulnerability for which tariffs can be justified. But that same dependence is what makes decoupling, no matter how mild, painful. Trump’s walkback on tariffs shows there are limits to how much pain Americans are willing to take.
Write to Greg Ip at greg.ip@wsj.com
