The Trump administration seems at long last to have realized that having a near-embargo in both directions between the world’s two largest economies isn’t such a great idea. The tit-for-tat tariff escalation that had resulted in 145 percent levies on Chinese goods entering the U.S. and 125 percent levies on U.S. goods entering China has been reduced to 30 percent and 10 percent, respectively, for the next 90 days.
These are still high tariffs, and they will still be damaging if they are the final outcome of this misguided policy. For the meantime, at least, it was encouraging to hear Treasury Secretary Scott Bessent say that “decoupling” is not in the interest of either the U.S. or China, and that both countries wish to continue trading for mutual benefit.
That is how trade works, contrary to what President Trump often says. He was just a few days ago praising the reduction in trade with China as a means of making the U.S. richer, a claim that was endorsed by Stephen Miran, the chairman of the Council of Economic Advisers, who knows better.
Bessent’s comments directly contradict the hopes of mainstream media’s favorite tariff advocate, Oren Cass of American Compass, that trade with China would be cut off. Cass takes legitimate concerns about national security and uses them to argue against imports of toys, baby strollers, and clothing. It’s good to see that the administration is not following in his autarkic exuberance.
They also contradict Vice President JD Vance’s insistence on the illegitimacy of trade with China due to “slave labor.” Goods produced with actual slave labor are already prohibited from being imported into the U.S., and Congress passed an additional law in 2021 specifically prohibiting goods produced in Xinjiang province with Uyghur forced labor. In reality, China is a middle-income country that is beginning to lose its low-end manufacturing jobs to other countries with lower labor costs.
We can scale back damaging entanglements with China without completely burning the bridge. One step in that direction would be enforcing the law already passed by Congress to eliminate Chinese government control of TikTok. Another is assessing particular critical products we need built at home. Moreover, efforts at a total embargo are apt to produce more contortions to route the China trade through third countries.
If national security is the primary goal, there are already plenty of tools at the government’s disposal to address specific national security concerns for specific categories of products. National security is not the primary goal of these tariffs, which are sold and justified legally on the theory of shrinking the U.S. trade deficit.
Tariffs are unlikely to make a significant difference in the trade deficit, because they reduce imports and exports. During Trump’s first term, tariffs on China hardly changed the trade deficit with that country, and there’s little reason to believe the results will be different this time. And there’s no reason to target the trade deficit at all, especially the trade deficit with a single country, which is an accounting statistic with no economic significance.
Chinese exports to the U.S. have declined this year, but Chinese exports have risen overall. That indicates that Chinese companies have found new customers to replace American customers, and it also likely means that they are finding ways to continue exporting to American customers through third countries. In a world of nearly 200 countries, such gaming is impossible to prevent.
Similarly, trade with China accounts for only about 10 percent of total U.S. international trade. Neither side has a ton of leverage over the other to extract any massive concessions, which is probably what negotiators in Geneva realized when they reduced their absurdly high tariffs in exchange for basically nothing except the promise of more negotiations.
Those negotiations aren’t likely to turn up much that isn’t already known. China does a whole bunch of stuff that violates international trade rules that is already documented in countless government reports. Significant U.S. tariffs, in effect for seven years and counting, have been powerless to stop it. They have raised costs for American consumers and harmed American businesses, especially small businesses that don’t have the money to hire tariff lobbyists and attorneys to find workarounds.
Calling off the near-embargo was the right move. Leaving in place 30 percent tariffs on Chinese goods won’t make China any freer, but it will make Americans a little poorer. Let’s hope the administration ignores the anti-trade voices in its orbit and continues on its path to exiting from this destructive policy error.