What Happened: U.S. President Donald Trump tweeted May 5 that tariffs on $200 billion in Chinese imports would increase May 10 to 25 percent from 10 percent, citing slow progress in trade talks between China and the United States. Trump also threatened to impose tariffs of 25 percent on an additional $325 billion in Chinese goods “shortly.”
Why it Matters: Trump’s threat to keep tariff options open sharply raises the stakes in trade negotiations between China and United States now approaching their final round, increasing the pressure on China to make further concessions to secure a deal. The threat is timed with the next round of negotiations, in which Chinese negotiator Liu He was expected to lead a large Chinese delegation to Washington on May 8.
Background: Trump originally imposed a 10 percent tariff on $200 billion in Chinese goods in September 2018 and a 25 percent tariff on roughly $50 billion in other goods, but delayed raising or imposing additional tariffs on Chinese goods. In ongoing trade talks, China has focused primarily on offering concessions on purchases of U.S. goods and allowing greater market access, ignoring key structural demands by Washington. According to recent rumors, the White House has lessened its demands on some structural issues in a bid to secure a quicker deal with China. But gaps in the two sides’ negotiating positions remain, and what an eventual enforcement mechanism might look like has also yet to be resolved.