Trump’s Tariff Shift Shows U.S. Weakness Amid China Resilience
After months of tit-for-tat increases, President Donald Trump has signaled a readiness to roll back some of the most punitive U.S. tariffs on Chinese goods. But analysts say the U.S. is ceding leverage while China remains in no hurry to strike a deal, leaving major tech supply chains and even TikTok’s future hanging in the balance.
Tiered Tariff Rollback: The New ‘Art of the Deal’?
On April 22, Trump told reporters he’s open to cutting the peak 145% reciprocal tariffs on Chinese goods down “to somewhere between 50% and 65%.” White House insiders suggest a tiered approach could emerge:
- Non‑sensitive consumer electronics: 35% tariff.
- Strategic components (semiconductors, 5G radios): up to 100% for “national security” items.
- Phase‑in schedule: over five years with quarterly adjustments based on compliance metrics.
Economists warn that by hinting at large cuts before talks even begin, the U.S. risks giving China the upper hand in negotiations—especially if Beijing simply drags out the process to extract greater concessions on market access, IP protections and forced technology transfers.
Delayed High‑Level Engagement
To date, Trump has not met face‑to‑face with President Xi Jinping; discussions have been routed through deputies in the Commerce Ministry and Treasury. A White House source told Reuters that Trump is even willing to suspend unilateral tariff actions in exchange for “formal, binding negotiation commitments,” an extraordinary concession that analysts say underscores U.S. desperation.
Technical Impact on Global Supply Chains
Tariffs of 100% on advanced chips and 65% on sub‑10nm wafers would effectively double fabrication costs for U.S. assemblers. Key effects include:
- Component sourcing shifts: Taiwanese and South Korean foundries (TSMC, Samsung) see order inflows as U.S. firms reroute around Chinese fabs.
- Inventory buffering: Electronics OEMs are increasing on‑hand parts by 20–30% to hedge against future tariff hikes.
- Contract renegotiations: High‑volume purchasers like Apple and Dell are seeking price concessions from suppliers to offset import levies.
Geopolitical Implications for the Semiconductor Industry
The U.S. CHIPS and Science Act has funneled $52 billion into domestic fab expansion, but full production of leading‑edge (5nm and below) chips remains two years away. In the interim:
- SMIC (China’s largest foundry) accelerates R&D on 7nm lithography, targeting 2026 volume production.
- Equipment constraints: ASML’s EUV tools are still barred from China, limiting Beijing’s ability to close the node gap.
- Strategic stockpiles: U.S. DoD is reported to be building an emergency reserve of 10,000 wafers for defense microcontrollers.
National Security and Data Privacy Concerns Over TikTok
The administration’s earlier tariffs helped scuttle a proposed spin‑out agreement that would have transferred TikTok’s U.S. operations into a domestically controlled LLC. ByteDance was ready to hold a minority stake, with encryption keys, user data siloing and third‑party audits baked into the design. But China’s refusal to authorize the deal until broader trade tensions ease has left TikTok’s U.S. fate in limbo.
Economic and Political Pressures on Both Sides
China’s foreign ministry spokesperson Guo Jiakun warned that “threats and coercion must end,” while Alicia Garcia‑Herrero, chief Asia‑Pacific economist at Natixis, said: “The U.S. is so anxious for a quick deal that China can ask for minimal concessions—perhaps just a few billion dollars in additional agricultural imports and relaxations on EV tariffs.”
Conversely, U.S. Treasury Secretary Scott Bessent acknowledged in late May’s G7 meeting that “145% vs. 125% is untenable” and predicted a near‑term de‑escalation. But with U.S. living costs rising, markets jittery and the dollar losing ground against a resurgent yuan, analysts believe China can hold out for a sweeter overall package.
-added-analysis- The Rise of the Digital Yuan
Beijing’s accelerated roll‑out of its central bank digital currency offers China an alternative to SWIFT‑based transactions, potentially undermining U.S. dollar supremacy. Pilot programs in Shanghai and Shenzhen have already processed $12 billion in retail CBDC payments, demonstrating both technical readiness and consumer acceptance.
-added-analysis- Coordinated International Response
EU trade officials are quietly exploring joint measures to pressure China on market access and IP enforcement. At the same time, Japan and South Korea are weighing tariff alignments to present a unified front—potentially trapping Trump between competing blocs.
Conclusion
While Trump attempts to project strength by threatening to reinstate higher tariffs if talks falter, analysts see an administration boxed in by economic risks and wavering domestic support. Meanwhile, China’s patient strategy—buoyed by robust supply chain control, digital currency gains and steady economic growth—positions it to dictate final terms.