Tariff Flip-Flops

New York Times

13-05-2025

President Trump made big promises with his China tariffs: China needs us more than we need it. America can outlast China in a trade war. Those advantages will let the administration get big concessions and rebalance global commerce.
Trump's actions, however, suggest the talk was bluster. Yesterday, his administration cut its China tariffs from 145 percent to 30 percent for at least a few months. China will reciprocate by lowering its retaliatory levies from 125 percent to 10 percent. Both sides will keep talking.
But China made no concessions. By now, most of us are familiar with this pattern: Trump makes big claims about what his tariffs can get, only for him to later back down without the other country giving up anything meaningful. It happened with Mexico, Canada and most of Trump's 'Liberation Day' levies. Despite his claims, America seems to need other countries' trade as much as they need ours, diminishing Trump's negotiating position. Today's newsletter explains.
Price hikes and shortages
Here's the problem: Trade is mutually beneficial. The buyer gets a good, and the seller makes a profit. The United States runs a trade deficit with China — it buys more than it sells — because Americans have the cash and want what China is selling.
Trump's tariffs on China were so high that they were effectively an embargo that threatened to end all of those mutually beneficial transactions. That would cover a lot of goods — more than 70 percent of smartphones, laptops and toys — as well as manufacturing materials, particularly rare earth metals used in modern electronics. Retailers warned that prices would rise and shelves would go empty. Markets tumbled.
The hits to the economy weakened Trump's negotiating position, and China knew it. Americans spent the last few years fuming about inflation and supply mishaps, and they would be furious if those problems continued. And unlike previous bouts of inflation that leaders could pin on the pandemic or the Ukraine war, this time it would clearly be Trump's fault.
So China took a patient approach. Let prices rise and markets fall, and eventually Trump would have to give in. That strategy worked, at least for now.
What remains
Trump still has time to get some concessions out of China, which does not want to lose its biggest global customer. The concessions could be small. In the past, countries have given Trump minor compromises in response to tariffs — enough for him to save face, essentially — as when Canada vaguely promised to step up border enforcement earlier this year.
In the meantime, tariffs remain much higher than they were before Trump's second term. When Trump ran for president, many economists warned that his promise of 10 percent tariffs on every other country would hurt the economy. Even after all of Trump's backpedaling, a 10 percent universal tariff is still in place. Duties on specific goods, such as cars, are even higher. Prices on clothes, appliances, video game consoles and everything else made in other countries will likely rise as a result.
For more
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It's always a feat to get skittish officials to confide in reporters. Yet Times journalists persuaded many Vatican leaders (sworn to secrecy on pain of excommunication!) to share how they narrowed three front-runners down to a single obvious choice. I asked Jason Horowitz, our Rome bureau chief, how they reported it out. — Adam B. Kushner
I thought deliberations inside the Sistine Chapel were sacrosanct!
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