Trump moves toward levying new tariff on China for flooding market with cheap goods

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U.S. President Donald Trump with Chinese President Xi Jinping. File. | Photo Credit: Reuters

President Donald Trump is moving toward levying a new tariff on China that would penalise the world's second-largest economy for flooding the global market with underpriced goods, according to three people familiar with the matter.

Two of the people who spoke on condition of anonymity to discuss internal deliberations still being finalised said Mr. Trump is considering setting the new tariff at 7.5%. It's a level administration officials believe would not endanger the one-year trade truce between Washington and Beijing or a planned White House meeting between Mr. Trump and Chinese President Xi Jinping expected to take place in late September.

The move, if finalised, appears to be a calibrated effort by the White House to work around a Supreme Court decision earlier this year that struck down Trump's plan to implement a sweeping, high-tariff scheme not seen since the 1930s.

After that decision, the Trump administration announced in March it was launching formal investigations targeting excess industrial capacity and forced-labour regulations in China and other nations.

It isn't clear if the U.S. administration is also nearing its decision in its probes of the other economies that it announced it was investigating for unfair trade practices, including the European Union, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, South Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan and India.

The White House and the U.S. Trade Representative's office did not respond to requests for comment on the tariff deliberations, which Bloomberg News reported earlier on Monday (August 24, 2026). The Chinese embassy in Washington also did not immediately respond to a request for comment.

The excess industrial capacity probe of China was initiated under Section 301 of the Trade Act of 1974, which allows the president to levy tariffs against nations that discriminate against U.S. companies or commerce.

The people familiar with the deliberations stressed that Trump could still change his mind on the new tariff on China.

It would come on top of tariffs of 10% to 12.5% announced last month for 60 economies around the globe that the Trump administration accused of failing to effectively enforce a ban on goods produced with forced labour.

Many countries, including China, protested that move, which took effect just as the clock ran out on temporary tariffs Mr. Trump had turned to after the Supreme Court in February struck down sweeping “reciprocal” tariffs he levied on nearly every U.S. trade partner.

China last month pushed back against claims of overcapacity, anticipating that the US would soon release results of its probe and impose new tariffs.

Massive capacity in a slew of Chinese industries, from autos to solar panels, cement and steel manufacturing, has drawn increased attention from Beijing's trading partners in recent years.