U.S. hits brakes on trade war with China

What happened

The Trump administration walked back its most aggressive tariffs on China last week, easing a trade war that had effectively halted the shipment of goods between the world's two largest economies. After talks in Geneva, the two sides agreed to a 90-day pause during which the U.S. will lower tariffs on most Chinese goods from 145 percent to 30 percent, while China drops its rate on U.S. imports from 125 percent to 10 percent. The U.S. will also set the "de minimis" tariff, which applies to shipments under $800, at 54 percent for some deliveries from China and 30 percent for others. Until this month, such low-value shipments—many sent by Chinese e-commerce giants Shein and Temu—had entered the U.S. duty-free. "The consensus from both delegations is that neither side wanted a decoupling," said Treasury Secretary Scott Bessent, who led the U.S. negotiating team. Chinese state media hailed the agreement as vindication for Beijing's defiant posture.

The administration also struck a framework trade deal with the U.K. The U.S. will keep its 10 percent global baseline tariff in place but will reduce or eliminate duties on some British goods, including cars, steel, and aluminum, and the U.K. will allow in a certain amount of U.S. beef and ethanol duty-free. Even with both deals, though, the overall U.S. tariff rate remains extremely high at 18 percent, the highest since the 1930 Smoot-Hawley tariffs that worsened the Great Depression. Still, on news of the China deal, the stock market rebounded. Goldman Sachs lowered its assessment of the risk of recession from 45 percent to 35 percent, although economists said a slowdown appears unavoidable.

What the columnists said

Both these trade deals represent "major retreats" by President Trump in his own trade war, said The Wall Street Journal in an editorial. The British deal was more show than substance, while the China deal is "more surrender than Trump victory." The good news is that China and the U.S. have stepped back from the brink of "mutual assured trade destruction." The enormous reduction in tariff rates on Chinese imports will, by one estimate, add up to $300 billion in tariff relief for the U.S. "That's a huge tax reprieve."

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Yet it's only a reprieve from self-inflicted damage, said J.J. McCorvey in NBCNews.com. Trump's original sky-high tariffs would have cost U.S. households an average of $4,900 per year, according to the Yale Budget Lab. Reportedly, it was the warning that his own voters would suffer that helped persuade the president to reverse himself. But the new tariff rates will cost the average household $2,800. That's still "a big price" to pay—and this "trade war is far from over."

It's unclear what the end goal is here, said Nick Catoggio in The Dispatch. What was the rationale for tariffs? To make China crack down on fentanyl trafficking? To "decouple our economy from theirs, forcing America to rebuild its manufacturing base by thrusting the country into autarky?" To get China to lower its trade barriers—which would be helpful? It was none of these. "There was no plan." Trump just wanted to "dial up the tariffs and see what happens."

There's a plan, all right—a nefarious one, said David Frum in The Atlantic. Tariffs are regressive taxes, remember. They tax the goods that poor people buy but not the services that rich people use. "The working man's car is tariffed. The rich man's chauffeur is not tariffed." That means the tariffs enable a "fiscal redistribution from poor to rich." Trump is trying to balance his tax cuts for billionaires by making average Americans pay more for goods. And tariffs have another advantage: Unlike corporate income taxes, they can be waived for firms and individuals who do Trump's bidding or give him money.

Does Trump even have the power to do this? asked Ian Millhiser in Vox. A federal statute grants the president tariff authority in the event of an "unusual and extraordinary threat," but Trump's justification for invoking these emergency powers is the trade deficit, which has existed for decades. Small businesses are currently challenging the tariffs at the U.S. Court of International Trade, and "skeptical questions" from the three-judge panel suggest it could well rule all of Trump's new tariffs unlawful. In that case, the administration would appeal. It's the Supreme Court that's "likely to have the final word."