Without a trade agreement in place, tariffs were poised to escalate dramatically, raising concerns of a return to trade barriers reminiscent of historical high tariffs that had previously stifled commerce between the United States and China, the world’s two largest economies. This urgency was heightened as a 12.01 am ET deadline loomed, threatening to increase tariffs on Chinese imports from 30% to 64%.
Reports suggest that while American goods are currently subject to tariffs starting at 10%, details regarding China’s potential tariff rates on these goods are uncertain. Recently, President Trump enacted a series of reciprocal tariffs across various trading partners, pushing the United States’ effective tariff rate to levels unseen since the Great Depression.
If tariffs on Chinese goods, America’s second-largest source of imports, had risen, the economic burden would likely have fallen on American businesses and consumers, further compounded by existing import taxes. Following a meeting in Sweden last month, Chinese negotiators indicated progress towards an agreement, though US officials maintained that nothing was confirmed without Trump’s endorsement. The president himself expressed optimistic sentiments about his relationship with Chinese President Xi Jinping.
At that meeting, Treasury Secretary Scott Bessent warned China that continued purchases of Russian oil could lead to extensive tariffs, with Congress backing legislation allowing Trump to impose levies of up to 500%. Trump’s threats have also extended to India, which has been targeted with potential tariffs if it persists with Russian oil purchases.
Critics have pointed out that India’s treatment appears unjust, given that other nations also engage in similar transactions with Russia. Trump hinted that more countries might face similar tariffs in the future, indicating a broader trend of potential trade penalties.
In recent weeks, the US administration has shown a softer approach towards China, possibly in light of negotiations aimed at securing a high-level meeting between Trump and Xi. Any concession from China regarding its oil purchases from Russia would likely occur quietly rather than through public declarations, according to trade experts.
Concerns have also arisen about China’s extensive sale of dual-use technologies to Russia and its dealings in Iranian oil, alongside contentious issues pertaining to the export of rare earth magnets. While China has agreed to ramp up exports, Trump believes it hasn’t complied fully with these commitments. Additionally, the US government is seeking a new American owner for TikTok, with a deadline for change imposed by Congress to avoid a potential ban.
On the stock market front, US shares faced declines on Monday, ahead of forthcoming inflation data expected to be released the next day.