A new tranche of tariffs on 16 United States trading partners including China may be delayed by President Donald Trump’s planned summit with Chinese President Xi Jinping next week, according to a report from Bloomberg.
Xi will travel to Washington, D.C. on Thursday for the long-awaited meeting, wherein the two leaders are expected to discuss a range of issues from the war in Iran to potential safeguards for artificial intelligence and, of course, trade. Trump told reporters Friday that he gets along well with Xi and that he expects to have a “very good meeting” with him next week.
Bloomberg sources did not cite a reason for the delay of the Section 301 tariffs. Trump may be seeking to use the threat of new duties as leverage in trade negotiations, as he has done often with U.S. trading partners over the course of the past year.
The Section 301 investigation, launched in March, targeted China, the European Union, Japan, South Korea, Mexico, Vietnam, Taiwan, India, Indonesia, Malaysia, Thailand, Bangladesh, Cambodia, Singapore, Switzerland and Norway with new duties based on the allegation that these economies maintain production capacity that exceeds their domestic needs. Doing this, the Office of the U.S. Trade Representative said, allows them to flood the market with exports that undermine American makers and deepen the U.S. trade imbalance with the rest of the world.
According to Bloomberg, the administration had been aiming to release the results of the investigation in a report before the Trump-Xi summit, but the plans were changed. The outlet wrote that the report contained a recommendation that China be hit with tariffs of 7.5 percent due to its perpetuation of excess capacity.
That Section 301 tariff rate would stack on top of the 12.5 percent levied on China due to another Section 301 investigation based on the importation of goods made with forced labor. Those tariffs took effect on July 24.
And as of this week, certain Chinese exports now also face the threat of 100 percent tariffs due to the passage of legislation aimed at curbing Russia’s access to funding for its war on Ukraine.
The Sanctioning Russia Act, which passed in the House of Representatives on Wednesday, targets foreign actors and economies like China and India for to their purchases of Russian oil. The bill, which was sent to the president’s desk to be ratified with a flick of a Sharpie, authorizes Trump to impose new duties of up to 100 percent on the top five purchasers of Russian energy products.
Bilateral trade between China and Russia ballooned to over $240 billion in 2024. Reports show that China takes in between 40-50 percent of Russia’s oil exports, making the relationship a top revenue driver for the war effort, in the eyes of the Trump administration.
China pushed back promptly on the passage of the Sanctioning Russia Act, though Trump has not yet signed the legislation or announced an intention to make good on the authority to levy new duties.
“China engages in normal economic and trade cooperation with other countries on the basis of equality and mutual benefit. Such cooperation does not target any third party and shall be free from disruption or coercion from any third party,” China Foreign Ministry spokesman Guo Jiakun said during his daily briefing. “China opposes long-arm jurisdiction and unilateral sanctions that have no basis in international law and lack UN Security Council mandate.”
The U.S. agricultural sector, including cotton producers, is also hoping that next week’s meeting will alleviate, not deepen, the tensions that have led to years of tit-for-tat trade actions between the U.S. and China.
U.S. cotton exports to China fell precipitously since the start of the trade war, according to U.S. Department of Agriculture (USDA) data. China’s purchases of U.S. cotton fell by 85 percent year-over-year, from $1.5 billion to $0.2 billion, or 0.8 million metric tons to 0.1 million metric tons. The National Cotton Council (NCC) wrote that cotton sales to China have fallen more than 95 percent below historical baselines.
There are signs, however, that there’s a mutual benefit to resolving the conflict, especially when it comes to the cotton trade.
NCC data showed that China booked 96,400 running bales in early September, which are presumed to be short-term replenishment buys.
This came after China began releasing a portion of its cotton reserves in July. Jon Devine, chief economist in the corporate strategy and program metrics division at Cotton Incorporated, said at the time that this could portend a need for China to come back to the U.S. for more fiber in the coming months.
