President Donald Trump said his tariffs may cause “transition problems” but expressed confidence in his plan, after the White House clarified US tariffs on China rose to 145%.
“There’ll be a transition cost, and transition problems, but in the end it’s going to be a beautiful thing,” Trump said Thursday during a Cabinet meeting. “We’re in very good shape.”
The staggering US tariffs on the world’s second largest economy have triggered a tit-for-tat trade war that has unnerved global financial markets.
Trump is imposing a 125% charge designed to both counter America’s trade deficit with China and punish Beijing for retaliating against US import taxes. The number, published in a White House memo Thursday, comes in addition to a 20% levy put into place earlier this year over China’s role in fentanyl trafficking.
Other Chinese imports, such as materials used in solar panels, are already subject to import taxes.
Stocks fell on Thursday one day after the biggest buying spree in years. The S&P 500 Index sank more than 6%, before paring losses, as euphoria gave way to unease with investors bracing for more trade hostility.
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Trump pointed to Wednesday’s upswing after he announced a 90-day pause on higher tariffs on dozens of trading partners, saying “we had a big day yesterday.” He later told reporters he had not seen Thursday’s market numbers.
Treasury Secretary Scott Bessent cited lower oil prices, a successful bond sale and better-than-expected inflation figures, while dismissing the significance of Thursday’s selloff.
“Look, the up two down one is not a bad ratio,” Bessent said, adding that he did not “see anything ususual today.”
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Trump told a reporter he thought the first deals are “very close” and voiced optimism that China would eventually come to the table. He also indicated willingness to be “flexible” on exemptions for companies or countries from the tariff regime, including on the 10% floor he’s established for all trading partners.
“Some countries, we have massive deficits with or they have big surpluses with us, and others is not that way — so it depends,” Trump said.
Still, Trump continued to emphasize that he would reimpose substantial “reciprocal” tariffs if satisfactory deals weren’t struck over the next three months, and indicated he’d look to remove non-tariff barriers even with countries that had trade surpluses.
The Treasury and Commerce Departments, as well as the US Trade Representative, would be involved in the discussions in addition to Trump himself, Bessent said.
“We’re putting a process in place,” Bessent told the president, later adding that “we will end up in a place of great certainty over the next 90 days on tariffs.”
Commerce Secretary Howard Lutnick said nations are making offers “they never, ever, ever would have come with, but for the moves that the president has made.”
The tariffs are far above the level many economists said could decimate US-China trade, and the overall tariff level could send shockwaves through the economy. Even after Trump’s pause, American average import taxes are still rising to a modern historic level of 24%, according to Bloomberg Economics.
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Tariff Confusion
Trump’s tariff rollout has been marked by confusion, as the president has repeatedly shifted course. Large placards with tariff rates displayed at the president’s April 2 announcement were inconsistent with numbers the White House published in its official order, and the formal rates were later changed to reflect the figures on the posters.
The president on Wednesday abruptly announced plans to put off higher levies on dozens of nations hours after they went into place, following a bond-market rout, even as he escalated his trade fight with Beijing.
The US’s other trading partners will face a 10% blanket import tax to allow time period to negotiate individual trade agreements. If that doesn’t succeed, the higher duties are set to go into place on July 9.
The president’s order published Thursday also raised duties even further on small packages from China that were previously not taxed, which could hit American shoppers purchasing goods from retailers like Temu and SheIn Group Ltd.
