US President Donald Trump is considering a new 7.5% tariff on Chinese goods as his administration moves to penalize China for what it views as excess industrial capacity and the flooding of global markets with underpriced products, according to three people familiar with the deliberations.
Two of the sources said the proposed rate is designed to avoid jeopardizing the one-year US-China trade truce or a planned meeting between Trump and Chinese President Xi Jinping expected in late September. The sources spoke anonymously because the administration’s discussions have not been finalized.
The proposed tariff would come after a US Supreme Court decision earlier this year struck down Trump’s sweeping high-tariff strategy. The administration subsequently launched formal investigations into China and other economies over excess industrial capacity and forced-labor regulations.
If approved, the new tariff would be imposed on top of existing tariffs, including duties of 10% to 12.5% announced last month for 60 economies accused by Washington of failing to effectively enforce a ban on goods produced with forced labor.
Trump could still change or abandon the proposed China tariff, the sources cautioned. The White House and US Trade Representative’s office did not respond to requests for comment. China’s embassy in Washington rejected the premise of the proposed action, saying trade and economic disputes should be resolved through bilateral negotiations rather than unilateral tariffs. Beijing also rejected claims that China faces an excess-capacity problem.
The US investigation into China’s industrial capacity was launched under Section 301 of the Trade Act of 1974, which allows the president to impose tariffs on countries deemed to discriminate against US companies or commerce.
China’s large industrial capacity in sectors including automobiles, solar panels, cement and steel has drawn growing concern among trading partners. Slowing domestic demand has also encouraged Chinese companies to expand overseas, contributing to a record trade surplus of nearly $1.2 trillion last year.
Beijing has rejected claims that it deliberately seeks a large trade surplus. The tariff deliberations come as Washington separately prepares potential secondary sanctions on countries continuing to trade with Iran, adding another layer of economic pressure involving China, which is Iran’s largest trade partner.
