In a striking pivot from his earlier hardline stance, President Trump declared that he “won’t play hardball” with China as he seeks to revive stalled trade talks, signaling a potential thaw in U.S.–China economic tensions. The White House echoed this softer posture, stating it is “setting the stage for a deal with China” as administration officials aim to reassure markets and trading partners alike.
Mr. Trump further clarified that punitive levies, once slated to soar to 145%, “won’t be anywhere near that” level, though he insisted they “won’t be zero,” underscoring a calibrated de-escalation designed to buoy investor sentiment without abandoning leverage.
Trump’s Softened Stance
President Trump’s most recent remarks mark a notable departure from his previous rhetoric of escalating tariffs as a primary bargaining chip. During an Oval Office briefing, he emphasized that, while he retains the power to impose steep duties, his intention is to coax China into a mutually beneficial agreement rather than to crush its economy.
“It won’t be that high… It won’t be anywhere near that high. It won’t be zero,” Trump told reporters when questioned about the proposed 145% tariffs on certain Chinese goods.
By publicly dialing back the threat of extreme tariff hikes, the president has recalibrated his negotiating tone without relinquishing the possibility of retaliatory measures. White House Press Secretary Karoline Leavitt framed this approach as strategic pressure: “The ball is in China’s court,” she said, reaffirming that the administration still wields tariffs as both carrot and stick.
White House Signals and Market Ripples
Administration insiders describe a concerted effort to manage expectations in Washington and Beijing. Treasury Secretary Scott Bessent, addressing investors at a JPMorgan conference, warned that the trade war “is not sustainable” and predicted an imminent de-escalation, though formal talks have yet to commence.
His comments helped drive a late-day surge in U.S. equities, with Amazon and Nvidia climbing over 3% following the renewed optimism.
Meanwhile, the International Monetary Fund lowered its 2025 global growth forecast to 2.8%, explicitly citing steep U.S. tariffs as a drag on economic momentum. The IMF report noted that U.S. GDP could slow to 1.8%—down from 2.8% in 2024—and warned that Chinese growth may dip to 4.0% amid retaliatory measures, effectively framing the tariffs as an economic embargo on two of the world’s largest markets.
The Tariff Trajectory: What’s on the Table
In early April, the Trump administration unveiled a two-tier “Liberation Day” tariff structure, imposing a baseline 10% duty on most imports and country-specific reciprocal tariffs for over 60 nations. China, already hit by previous Section 301 measures, faced an effective levy of up to 54% after additional duties commenced on April 9, with proposals to raise it to 145% by mid-April.
Beijing retaliated with its own 125% tariffs on U.S. goods, targeting everything from agricultural products to industrial machinery.
Yet, in recent days, President Trump has hinted those extreme rates may never materialize. He acknowledged that Chinese officials “have reached out a lot” since the tariffs were announced and expressed hope that comprehensive talks could prune the highest duties while maintaining baseline protections. “We’ll set the deal, and it will come down substantially,” Trump predicted, emphasizing that any final arrangement will still preserve a modicum of tariffs to protect American interests.
Geopolitical and Economic Stakes
The U.S.–China trade dynamic extends far beyond bilateral commerce: it influences global supply chains, financial markets, and geopolitical allegiances. Investors and foreign governments alike are watching closely, hopeful that a “Phase Two” deal—possibly revisiting the 2020 “Phase One” framework—might lower barriers on hundreds of billions of dollars in goods.
Failure to clinch a pact, however, risks a protracted standoff, underscored by U.S. probes into pharmaceuticals and semiconductors that could expand tariff scopes.
Notably, industry groups are urging careful calibration. American retailers warn that excessive duties ultimately land on consumers, driving up costs and curbing spending. Meanwhile, rare-earth mineral producers urge trade leverage to bolster domestic supply chains, positioning the U.S. to win concessions from China on critical technology inputs.
What Lies Ahead
Looking forward, both capitals face a strategic conundrum: synchronize a deal in time to sustain market confidence, or risk eroding the very growth they seek to protect. President Trump’s public avowals of moderation—eschewing “hardball” tactics while retaining tariff firepower—suggest a hybrid strategy aimed at maximizing leverage without triggering a full-blown trade war.
With markets already rebounding on the promise of lower levies, the administration appears poised to extend its 90-day tariff pause beyond June, granting negotiators breathing room. Yet, the ultimate success of this economic détente hinges on substantive concessions from Beijing: increased purchases of U.S. goods, intellectual property assurances, and a leveling of the playing field for American companies in China.
As headlines shift from threats to talks, the “Trump-China trade tango” remains in full swing—each step, a blend of pressure and incentive, choreographed to achieve the administration’s vision of a more balanced global economy.
