Eagle and Dragon find common ground? Tariff war with China under Donald Trump 2.0

Mint

a day ago

Senior negotiators from the United States and China have reached a framework agreement to advance trade discussions, following a series of disputes that had put the negotiations at risk, according to Chinese state media on Wednesday.
The tensions had disrupted a fragile truce brokered in Geneva last month, prompting a phone call between US President Donald Trump and Chinese President Xi Jinping last week to ease the escalating friction.
Trump signed an executive order imposing a 10% tariff increase on imported goods from China, effective February 4, as part of efforts to combat the flow of fentanyl into the United States.
The move specifically targeted Chinese imports believed to be tied to the trafficking of fentanyl and its precursors. In a broader crackdown, 25% tariffs were also imposed on Canada and Mexico, citing similar concerns over the role of cross-border shipments in the drug crisis.
Moreover, Trump also eliminated the de minimis exemption, introducing stricter rules for packages handled by both postal services and commercial delivery companies.
He argued that the exemption had allowed a surge of shipments from Chinese e-commerce platforms and was being exploited by traffickers of fentanyl and other illicit substances.
The de minimis rule, in place since 1938, allowed low-value imports (under $800) to enter the U.S. without tariffs or rigorous screening. However, both Democratic and Republican lawmakers have increasingly criticized it, calling it a loophole that enables Chinese goods to evade tariffs and lets illicit drugs and fentanyl precursors slip into the country unchecked, according to Reuters.
On February 4, China's Ministry of Commerce announced the introduction of counter-tariffs on a range of U.S. goods. The move was a direct response to the United States' recent tariff hikes, and marked a significant escalation in the ongoing trade tensions between the two countries.
'The purpose of the Chinese government's implementation of export controls on relevant items in accordance with the law is to better safeguard national security and interests, and to fulfill international obligations such as non-proliferation,' said the Commerce Ministry of China, reported the news agency Reuters.
In a revision to his earlier executive order, Trump announced that eligible packages will continue to receive de minimis exemptions temporarily. The amendment stated that these exemptions will remain in effect until adequate systems are established to efficiently process incoming shipments and ensure full collection of tariff revenue.
'Exports of steel from the People's Republic of China (China) have recently surged, exceeding 114 million metric tons through November 2024 while displacing production in other countries and forcing them to export greater volumes of steel articles and derivative steel articles to the United States,' according to the official statement by the White House.
Trump on February 10 said that he would impose 25 per cent tariffs on steel and aluminium imports into America, reported the news agency AFP.
The newly imposed 25 per cent tariffs will be applicable to 'everybody' which includes countries such as Canada, Mexico, allied nations, and other large trading partners, as per the report.
Donald Trump signed a memorandum directing the Committee on Foreign Investment in the United States (CFIUS) to impose new restrictions on Chinese investments in strategic sectors.
According to a report by Reuters citing a White House official, the memorandum states that China is leveraging American capital and innovation to modernise its military, intelligence, and security apparatus, which the administration views as a direct threat to U.S. national security.
The Commerce Ministry announced that U.S.-grown chicken, wheat, corn, and cotton would be subject to an additional 15% tariff. It also stated that tariffs on sorghum, soybeans, pork, beef, seafood, fruits, vegetables, and dairy products would be raised by 10%.
Speaking on the same lines, the ministry said in a statement, 'The US's unilateral tariff increase damages the multilateral trading system, increases the burden on US companies and consumers, and undermines the foundation of economic and trade cooperation between China and the US.'
On April 2, Trump imposed a 34% reciprocal tariff on Chinese imports, declaring the date 'Liberation Day' to mark what he framed as a turning point in US economic independence from China.
This was in addition to an earlier 20% tariff introduced as punishment for China's alleged role in supplying fentanyl, a synthetic opioid that has contributed to the US drug crisis.
The move marks one of the most aggressive steps in Trump's trade agenda, aimed at what he described as the 'economic liberation' of the United States from foreign dependence—particularly on China's manufacturing and supply chains.
China announced on April 4, that it is set to impose an additional 34 per cent tariff on all goods imported from the United States as a counter-move after US President Donald Trump announced his reciprocal tariff move on Liberation Day, April 2.
'The purpose of the Chinese government's implementation of export controls on relevant items in accordance with the law is to better safeguard national security and interests, and to fulfill international obligations such as non-proliferation,' said the Commerce Ministry of China, reported the news agency Reuters.
The White House on April 8 confirmed that steep 104% tariffs on Chinese goods will officially gone into effect, marking a dramatic escalation in trade tensions between the world's two largest economies.
The additional duties will be collected starting April 9, as announced by Press Secretary Karine Jean-Pierre.
China on April 9, responded to US President Donald Trump's tariffs on Chinese exports by levying 84 per cent on its imports from America, intensifying the trade war between the world's top two economies.
China also added six US firms to its unreliable entity list, the Commerce Ministry announced. Disregarding strong opposition from China, these companies have participated in arms sales to Taiwan or engaged in military technology cooperation with Taiwan, undermining China's sovereignty, security, and development interests, news agency Xinhua reported.
China's Ministry of Finance raised tariffs on US exports to 125%, intensifying the trade conflict. Despite the sharp hike, the ministry signalled it would no longer engage in tit-for-tat responses, stating, 'China does not want to fight these wars but is not afraid of them. If the US continues its tariff 'numbers game', China will ignore it.'
"If the US insists on continuing to substantively infringe upon China's rights and interests, China's response will continue to the end," the ministry said.
Donald Trump said that he had struck a "fast deal" with China and accused China of "totally violating" the agreement, suggesting a breakdown in compliance shortly after the deal was made.
On Truth Social, Trump wrote, "Two weeks ago China was in grave economic danger! The very high Tariffs I set made it virtually impossible for China to TRADE into the United States marketplace which is, by far, number one in the World. We went, in effect, COLD TURKEY with China, and it was devastating for them. Many factories closed and there was, to put it mildly, 'civil unrest.' I saw what was happening and didn't like it, for them, not for us. I made a FAST DEAL with China in order to save them from what I thought was going to be a very bad situation, and I didn't want to see that happen."
'Because of this deal, everything quickly stabilized and China got back to business as usual. Everybody was happy! That is the good news!!! The bad news is that China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US. So much for being Mr. NICE GUY!,' he added.
In a key breakthrough during trade talks held in Geneva, Chinese and US officials reached a temporary agreement to de-escalate tariff tensions, with both sides agreeing to reciprocal tariff reductions totaling 115%.
1. The US tariff rate on Chinese imports will be brought down to 30%.
2. China's tariff rate on U.S. goods will be reduced to 10%.
3. A 90-day freeze will be placed on introducing any new trade barriers.
4. The two countries also agreed to further amend the de minimis rules, specifically targeting low-value shipments from China, to improve oversight and enforcement.
The US Court of International Trade in New York issued a major ruling, declaring that Trump lacked the legal authority to impose certain broad tariffs, including several targeting Chinese imports.
The court said, 'The question in the two cases before the court is whether the International Emergency Economic Powers Act of 1977 ('IEEPA') delegates these powers to the President in the form of authority to impose unlimited tariffs on goods from nearly every country in the world.'
In response to US President Donald Trump's accusation that China had violated the recent trade agreement reached in Geneva, China's Ministry of Commerce issued a sharp rebuttal on June 2.
According to an official translation, a spokesperson for the ministry said the U.S. actions had 'seriously undermined' the trade truce, citing several recent U.S. measures. 'The spokesperson said that following last month's Geneva talks, the US had successively introduced a number of discriminatory restrictive measures against China, including issuing export control guidelines for AI chips, stopping the sale of chip design software (EDA) to China, and announcing the revocation of Chinese student visas.'
Chinese President Xi Jinping and US President Donald Trump held a lengthy phone conversation on Thursday to address escalating tensions stemming from their tit-for-tat tariff war, according to China's state-run Xinhua News Agency.
During the call — which Xinhua noted was held 'at the latter's (Trump's) request' — both leaders agreed to continue trade negotiations through their respective representatives in an effort to resolve the ongoing standoff.
After the phone calls, Trump in a post on Truth Social said 'I just concluded a very good phone call with President Xi, of China, discussing some of the intricacies of our recently made, and agreed to, Trade Deal'.
'The call lasted approximately one and a half hours, and resulted in a very positive conclusion for both countries. There should no longer be any questions respecting the complexity of Rare Earth products', he said, referring to Beijing blocking rare earth metals exports crucial to manufacturing automobiles, phones and missiles.
Donald Trump announced that the United States will send a high-level delegation to London for the next round of trade negotiations with China, set to begin on June 9.
Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and U.S. Trade Representative Jamieson Greer.
Senior US and Chinese negotiators have agreed on a framework to resume and advance trade negotiations, according to Chinese state media reports on Wednesday.
'Once the presidents approve it, we will then seek to implement it,' US Commerce Secretary Howard Lutnick told reporters in London, as reported by Bloomberg. The breakthrough came after two days of high-stakes talks in London, which concluded late Tuesday.
Li Chenggang, a vice minister of commerce and China's international trade representative, said the two sides had agreed in principle on a framework for implementing the consensus reached between the two leaders and at the talks on Geneva, the official Xinhua News Agency said.
(With inputs from agencies)