Trump Backtracks on Harsh Tariffs Against China

Washington backpedals on trade war as Trump hints at tariff rollback amid legal backlash from states

In what appears to be a marked reversal of his hardline trade policy, President Donald Trump on Wednesday hinted at the possibility of a “special deal” with China, signalling potential cuts in punitive tariffs his administration had previously imposed. The announcement coincides with a significant legal challenge from a coalition of 12 U.S. states suing the administration over its tariff regime, deepening the political and economic turmoil sparked by Washington’s ongoing trade war.

Trump’s comments, delivered during a press briefing at the White House, suggest his administration is actively considering reducing tariffs on Chinese imports from their current peak of 145 percent to a range between 50 and 65 percent. In some cases, the rate could fall to as low as 35 percent, particularly on goods deemed non-critical to national security. “Maybe we’ll make a special deal,” Trump said, adding that Chinese officials were being invited to Washington for further negotiations. “I hope we can make a deal. Otherwise, we’ll set a price,” he declared.

The timing of Trump’s softening stance is no coincidence. Just a day earlier, Treasury Secretary Scott Bessent reportedly told a closed-door meeting that the current tariff levels were “unsustainable”, a rare public crack in the administration’s typically united trade front. The remarks suggest growing internal dissent, perhaps fuelled by months of market volatility, inflationary pressures, and the slow bleed of American agricultural and manufacturing exports.

Legal pressure mounts

Compounding the policy rethink is a lawsuit filed on Wednesday at the U.S. Court of International Trade in New York by attorneys general from a dozen states. The suit contends that the administration’s tariff policy lacks legal foundation and accuses President Trump of acting on “whims rather than the sound exercise of lawful authority.” At the heart of the case is the White House’s reliance on the International Emergency Economic Powers Act (IEEPA), a statute critics argue was never intended to support broad tariff powers absent Congressional approval.

The plaintiffs seek a declaration from the court that the tariffs are unlawful and an injunction to prevent federal agencies from enforcing them. “This legal challenge is about restoring constitutional order and protecting our states from arbitrary economic harm,” said one state attorney general involved in the suit.

Economic blowback and political retreat

This is not Trump’s first tariff retreat. In the early months of his first term, he imposed sweeping 26 percent tariffs on imports from over 180 countries under the guise of enforcing reciprocal trade. Amid backlash and a stock market rout, the administration walked back the policy, slashing rates to 10 percent and introducing a temporary 90-day moratorium. The current climbdown bears an uncanny resemblance, further fuelling concerns among business leaders and investors about the unpredictability of U.S. trade policy.

Market reaction to the latest developments was broadly positive, with equities rebounding on hopes of de-escalation in U.S.-China tensions. But the damage to global trade sentiment has already been done. The whiplash from Washington's policy reversals has sent shockwaves through supply chains and financial markets, with the two-month period following Trump’s inauguration marking one of the steepest early-term declines in global equities.

A flawed political calculus

Throughout his presidency, Trump has portrayed tariffs as a populist tool to “Make America Great Again” and reclaim manufacturing jobs lost to overseas competition. At one point, he even suggested that once the U.S. achieved economic self-sufficiency, Americans might no longer need to pay income tax—a claim widely dismissed by economists as fanciful. In reality, his administration appeared intent on using indirect taxes—tariffs on consumer imports—to plug gaps in revenue left by cuts to direct taxation.

Beijing, for its part, has responded in kind. Chinese tariffs on American goods now stand at up to 125 percent, further entrenching the tit-for-tat dynamic that has paralysed global trade diplomacy. Chinese Foreign Ministry spokesperson Guo Jiakun rebuked Washington’s approach, stating: “If the U.S. truly wants to resolve issues through dialogue and negotiation, it should stop making threats and resorting to coercion.”

As talks between the two superpowers remain ongoing, Trump’s wavering signals a broader shift: from economic nationalism towards damage control. Whether this recalibration will lead to a coherent and sustainable trade policy remains to be seen. For now, America’s tariff strategy appears to be caught in a cycle of escalation, backlash, and retreat—an erratic dance with high stakes for both the global economy and Trump’s political legacy.