President Trump's rapidly escalating trade war with China has resulted in eye-opening tariffs on products that have been exchanged with the nation and are competing for the outlook of many global companies that rely on trade. And the end is invisible.
The Trump administration has been waiting for Chinese leader Xi Jinping to personally call out Trump, but Beijing appears wary of putting Xi in an unpredictable and embarrassing situation with the US president.
Two governments were at a dead end, and companies relying on sourcing products from China, ranging from hardware stores to toymers, have fallen into chaos. The triple-digit tariff rate forced many to stop freight altogether.
Trump officials argued that the current situation with China regarding trade is not sustainable. Trump ratcheted tariffs on Chinese goods quickly from 145% just a week from 54% on April 2nd. The Chinese government raised tariffs on American goods to 125% on Friday, claiming that the actions were unfair and closely matched his moves.
But on Friday night, the administration created a major sculpture on tariffs in China when it exempts several electronic devices, such as smartphones, laptops and televisions. These products are subject to other tariffs Trump has introduced, including the 20% fees he added to Chinese products in response to the country's role in the fentanyl trade.
Trump says he wants to talk to XI, but according to people familiar with the matter, he has stopped asking for calls, believing it was Beijing's turn to seek such a call. Trump officials say dozens of countries have contacted the administration about negotiations since taxation was imposed. China did not, instead responded with its own strict language and tariffs.
Throughout the Trump administration, some officials are concerned that the trade war could soon spread into a national security crisis, allowing potential Chinese people to plan a military aggression in Taiwan.
The pentagon, according to people with knowledge of preparation, assesses that China may block rare earth exports to the US, and that it may block certain key elements used in the US weapons system. The aim is to fully see what China can do harm to America's ability to produce and maintain certain weapons and ammunition.
Trump continues to express his optimism, and he is always with Xi Jinping, saying that “something positive” comes from relationships. However, analysts suggest that the situation may already be out of control.
Julian Evans Pritchard, head of Chinese Economics for the research firm's capital economics, said the fact that Chinese authorities repeatedly matched US tariff hikes suggested they would not negotiate in a hurry.
“A partial rollback of tariffs seems likely at some point,” he said. “But it's difficult to imagine a meaningful reset in relations between the US and China.”
During a briefing on Friday, White House spokesperson Karoline Leavitt refused to say whether the country is in communication.
“I'm not going to comment on communications that are happening or may not happening. Either way, I'll leave it to the national security team to start these discussions,” she said. She said the president was optimistic and “has made it very clear that he is accepting business with China.”
Speaking at the White House last week, Trump said, “China wants to make a deal. They don't know how to proceed.” He added that the Chinese are “prideful people.”
Trump's move has raised tariffs to far more than what banned trade, causing a crisis for many American companies that rely on imports from China.
Rick Woldenberg, who runs Learning Resources, an Illinois educational toy maker, said the latest tariffs have already forced him to suspend cargo from China. He called the charges that Trump had charged him with a “joking” and said even concessions from his suppliers could not create dents in the costs he owe to the US government.
Learning Resources contracts with factories in Taiwan, India, Vietnam and other countries to manufacture products, but China is the largest supplier for most toymers. China accounted for two-thirds of all imports of toys and sports goods in the United States last year.
The learning resources are around 500 people, most of whom are in the US. We had planned to hire more this year to keep up with the fast-growing business, but now we're abandoning some of those plans.
“We are suffocated by our own government,” Waldenburg said.
Woldenberg said he paid about $2.3 million in customs and obligations in 2024. If sales were somehow kept to his forecast this year before the trade war, he would ultimately pay more than $100 million. That's more than he could pay if he cuts all the costs of the company other than his base salary.
At this point, Waldenberg said the numbers were little significant. Beyond certain levels, tariffs cannot be afforded by anyone in his business anymore.
“He was able to raise it to 100 billion percent, and that doesn't matter,” he said. “It's like a legal ban.”
Christophe Lavigne, president of Highfield, who manufactures boats in China and the US, said he expects some of his imports to be subject to 198% tariffs and has decided to simply halt his cargo for now.
He said the entire company and his employees and his dealership work was on the line. The pace of change was too fast and unpredictable, he added.
“We can't adjust the production line quickly enough,” he said. “Transforming the entire supply chain in just two months is ineffective.”
Large multinationals are in a better position to source their products from countries outside of China, but they are also upset. Craft retailer Hobby Lobby told vendors it would delay shipments from China as a result of the escalation of the trade war, according to a news report seen by the New York Times.
The retailer told the vendor that tariffs before and after would result in a “fast changing and unpredictable landscape” and that US and China's diplomacy would “provide a more stable and balanced outcome.”
The meaning of disrupting businesses with one of the country's biggest trading partners has bounced back through the economy. The dollar fell to its three-year low on Friday, with Treasury yields continuing to shake. The measure of consumer sentiment has also fallen, indicating that Americans are nervous about how high tariffs are.
Trump suddenly announced Wednesday a 90-day hiatus on “mutual” tariffs that he announced last week in countries around the world. However, these tariff threats, as well as the threat of retaliation against US exports, continue to be caught up in the global economy.
It remains to be seen whether the US and China may soon try to reach some kind of agreement. Those familiar with the conversation said White House National Security Council members had contacted the counterparts of the Chinese embassy, and former Chinese ambassador Kui Tiankai had been holding meetings in Washington and New York for discussion of relations over the past few weeks. However, there were few signs of communication between the Trump administration and senior officials of the Chinese government.
Earlier in Trump's first term, Xi flew to Florida's Mar-a-Lago Estate, where he met with Trump for hours, sharing what Trump later called “the most beautiful chocolate cake you've ever seen.” But that did not stop countries from entering the bruise trade war. And in his second term, Trump was even more encouraging and unpredictable.
Trump has given few public indications about what he wants from the Chinese. But Trump officials say the problem is well known. In its annual report released on March 31, the US Trade Representative detailed the trade barriers US companies face when selling overseas, dedicated 50 of the nearly 400 pages to China.
In recent weeks, in addition to combating Trump's tariff threat, China has added some US companies to an unreliable list of entities that essentially prohibit them from doing business within the country. It also imposes a licensing system that restricts the export of rare earth elements essential to electric vehicles and other products.
On Friday, it announced the latest increase in tariffs on American products, and Beijing said it would not raise the rates further as the numbers have already been so high as they no longer make a difference.
China's Commerce Department said the US used tariffs “for bullying and coercion” and ultimately became “laughter.”
“If the US continues the tariff number game, China will ignore it,” it said.
China has also put pressure on US companies as they issued new regulations in which US companies have imposed higher tariffs on semiconductors that US companies have put in overseas.
The move puts pressure on Intel, Global Foundries and other companies with chip factories in the US. It could also encourage chip companies to shift their manufacturing from the US to maintain access to the Chinese market, where the majority of global electronics is created.
Paul Triolo, a partner at business strategy company DGA-Albright Stonebridge Group, said that after China's restrictions last week, electric vehicle companies and others are trying to find alternatives to rare earth minerals and magnets.
Some companies will need to stop production after 30 or 60 days, depending on their stockpiles and how quickly they consume those materials, he said. “It's like a game of music chairs,” he said. “We talk to clients who scramble to find alternatives, but few have been there.”
Sean McLeash, Maggie Haberman, Karen Weisse, Tony Romm and Jonathan Swan reported.
