President Donald Trump says his new promise that he’ll be lowering astronomical tariffs on Chinese goods is the result of Beijing’s expressing interest in negotiating a trade deal with him. He even boasted to reporters on Wednesday that talks were “active” over a “fair deal.”
But the next day China said those talks were nonexistent. “China and the U.S. have not engaged in any consultations or negotiations regarding tariffs, let alone reached an agreement,” Guo Jiakun, a Chinese foreign ministry spokesman, said.
There is no underlying strategy or clear reasoning behind Trump’s erratic tariff maneuvers.
It’s certainly possible that Trump will lower the tariffs, but the idea that he’s doing it because his hard-hitting tariffs forced China to the table, hat in hand, is classic Trumpian nonsense. In reality there is no underlying strategy or clear reasoning behind Trump’s erratic tariff maneuvers. And even when he reduces them, he’s still dealing a blow to the economy.
Beyond Beijing’s credible denial, the obvious reason to doubt Trump’s account about why he’s lowering tariffs is that he’s on a streak of softening or backing off of his most radical economic policies. Market turmoil, as well as criticism from business interests and some Republicans within the MAGA coalition (including DOGE chief Elon Musk), seem to be incrementally curbing some of the president’s most economically reckless instincts.
He backed off of his senseless reciprocal universal tariffs after global markets plunged in response to them. He appears to have backed off of his threat to try to fire Federal Reserve Chairman Jerome Powell after signs of investor anxiety. Earlier this year he backed off a round of tariffs against Canada and Mexico by claiming he had secured concessions from them that were almost entirely cosmetic.
The Trump administration seems to have determined that the soaring 145% tariffs were too costly for the economy to carry on with. Shortly before Trump said tariffs on China were going to be reduced, Treasury Secretary Scott Bessent told investors at a meeting hosted by JPMorgan Chase that “no one thinks the current status quo is sustainable” with regard to tariffs on China, CNBC reported, citing a person in the room. Bessent also assured investors that there will be a “de-escalation” in the “very near future” and said anticipation of such a de-escalation “should give the world, the markets, a sigh of relief.”
Trump may claim this was simply the “art of the deal” — that he started with scorching hot tariffs only as an opening bid and that he always intended to go with milder stuff. But then he wouldn’t have unilaterally caved after China’s sharp retaliations for his tariffs. Part of the explanation may be that he expected Beijing to come groveling to him the way so many American business executives have. The New York Times reports: “In private, some Trump officials concede that they did not accurately predict China’s reaction. Mr. Trump seemed to expect China to be among the first to come begging for relief, given the size of its exports to the United States.”
Adam Hersh, a senior economist at the Economic Policy Institute, told me that he doesn’t believe Trump has shown any signs of a rational or strategic approach.
“If it was strategic, you wouldn’t be putting tariffs on Heard and McDonald Islands near Antarctica — full of penguins — or Lesotho, one of the poorest countries in the world,” Hersh said. “You wouldn’t be putting tariffs on countries that we’ve been encouraging as an alternative for manufacturing to divert investments out of China. Or putting tariffs on countries that you wanted alliances with to isolate China, so that you can get economic concessions from them. Instead, we’re driving all those countries into China’s arms.”
Even Trump’s reductions may not be nearly enough to prevent vast economic harm to both countries. Trump has said tariffs will come down “substantially” but “won’t be zero.” The Wall Street Journal, citing people familiar with the matter, says the White House is considering cutting the tariffs by “more than half.” That could still leave massive tariffs on the country’s third-largest supplier of goods.
When I asked Hersh how consumers might react to tariffs at 50% to 60% on goods from China, he said, “That would drive consumers to substitute other goods or just make choices not to consume those products.” In other words, it would still effectively act as a trade embargo for many goods.
That’s to say nothing of the economic toll of uncertainty itself, which Trump is producing at extraordinary levels with his constant zigging and zagging. In such a climate, businesses are going to be hesitant to make investments, and consumers are going to be hesitant with spending their money, and it could take a toll on economic growth alongside Trump’s ongoing tariffs. Trump may consider himself a master of “The Art of the Deal,” but if he had done absolutely nothing at all, we’d be in a better position economically than the period of uncertainty his needless chaos has sent us straight toward.
