 US Eyes China Overcapacity Tariffs of 7.5% Before Xi-Trump Talks |
Source |
American Shipper |
Post Date |
08/26/2026 |
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The US is set to impose a 7.5% tariff on Chinese goods over allegations of excess manufacturing capacity before a planned summit between Xi Jinping and Donald Trump next month, according to people familiar with the matter.
The move would restore Trumps second-term duties on China to around 20%, a level Beijing has previously said is consistent with its trade truce with Washington. Those come on top of other levies imposed during Trumps first term and exted during the Biden administration.
It would mark the latest step by Trump to resurrect his protectionist trade aga after the Supreme Court struck down his previous import taxes on products from China and dozens of other economies, while stopping short of escalating the trade conflict with Beijing beyond the agreed-upon threshold.
Exact rates have yet to be finalized, said the people, who spoke on condition of anonymity. Trump is also known to make last-minute demands or changes to trade announcements. One option under consideration is announcing a higher duty rate for China but susp part of it in order to reduce the effective rate to 7.5%, a person familiar with the deliberations said.
The details of what rates would be susped and for how long is still under negotiation, the people added. Beijing and Washington are also looking to ext their so-called trade pact, which established a one-year truce thats set to expire on Nov. 10, they said.
In March, the Trump administration launched an investigation into more than a dozen major trading partners under Section 301 of the Trade Act of 1974 over excess capacity concerns. It was one of two probes that the presidents team used to replace his prior tariffs with more durable ones.
September Summit
Administration officials are hoping to publish the results of the excess capacity inquiry before Trump and Xi are due to meet in Washington on Sept. 24. The details of the overcapacity report have proven legally challenging, according to people familiar with the matter.
US Trade Representative Jamieson Greer told Bloomberg Television in July that the excess capacity investigation would take longer than another on forced labor due to its complexity and that the delay had nothing to do with efforts to maintain the truce with Beijing.
When asked about the tariff plans, a White House official said any announcements will come directly from the administration and that any reporting or discussion of them should be considered baseless speculation. The Office of the US Trade Representative didnt immediately respond to a request for comment. Chinas Ministry of Commerce did not respond to a fax for comment.
The Trump administrations approach to China, its foremost geopolitical rival, stands in stark contrast to its stance toward some of the USs biggest traditional allies. While the president has been keen not to upset his tariff truce with China, his administration applied 50% levy on billions of dollars of Canadian products and has mused about tearing up the North American trade agreement he renegotiated during his first term.
Trump is rebuilding a tariff wall that was struck down when the Supreme Court in February ruled his global levies, issued under the International Emergency Economic Powers Act, violated the US Constitution. The presidents temporary 10% global tariffs expired in July, and were also deemed illegal by a trade court.
The administration is justifying its new global duties under the findings of its investigations into forced labor and industrial overcapacity in the economies of dozens of trading partners.
As part of that campaign, the Trump administration in July imposed a 12.5% tariff on Chinese goods, citing inadequate efforts to address forced labor practices. While Beijing criticized the move, it stopped short of announcing retaliatory measures, instead saying Washington had agreed to cap any additional duties on Chinese exports at 20%. That clarified earlier comments that referenced tariff ceilings discussed during trade talks last year.
Malaysia Deal
"We hope that the US will honor its commitments, ensuring that regardless of the reasons given for imposing or replacing tariffs on China in the future, US tariffs on China will not exceed the levels outlined in the Kuala Lumpur trade consultations," Chinas Ministry of Commerce said in a May statement.
Section 301 allows the US Trade Representative, under the direction of the president, to impose tariffs in response to other nations trade measures it deems discriminatory to American businesses or in violation of US rights under international trade agreements. However, efforts to implement these levies have already come up against legal challenges.
A coalition of 25 states including New York, California and Illinois earlier this month filed a lawsuit at the US Court of International Trade, adding to similar proceedings by small businesses that claim the levies are illegal. The states allege Trump unlawfully invoked Section 301 to replace tariffs that were struck down by the Supreme Court by using the forced-labor rationale as a pretext.
The Trump administration has said the duties under Section 301 are legally sound and that the provision has been supported by previous court rulings.
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