Behind closed doors in Washington, U.S. President Donald Trump is advancing plans to impose a fresh tariff on Chinese imports, a move designed to penalize the world’s second-largest economy over longstanding claims that China dumps underpriced goods into global markets, three anonymous sources with knowledge of internal deliberations have confirmed.
Two of the sources, who requested anonymity to discuss unfinished internal policy discussions, noted that the White House is currently considering setting the proposed new tariff at a 7.5% rate. Administration officials have privately assessed that this moderate level would not jeopardize the one-year temporary trade truce that Washington and Beijing have upheld, nor derail the planned late September face-to-face meeting between Trump and Chinese President Xi Jinping scheduled at the White House.
If finalized, the new tariff would represent a carefully calibrated response by the Trump administration to a landmark Supreme Court ruling issued earlier this year. That ruling struck down Trump’s original proposal for a sweeping, across-the-board high-tariff regime that would have been the most aggressive trade measure implemented by the U.S. since the 1930s.
In the wake of the Supreme Court’s decision, the Trump administration launched formal industry probes in March targeting what it calls excessive industrial capacity and alleged forced labor-related regulatory gaps in China and more than a dozen other global economies. To date, there is no clear indication that the administration is close to concluding its investigations into the other targeted jurisdictions, which include the European Union, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, South Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan and India.
Neither the White House nor the Office of the U.S. Trade Representative responded to requests for comment on the ongoing tariff deliberations, which were first reported by Bloomberg News earlier this Monday.
In an official statement, the Chinese embassy in Washington pushed back against the proposed action, stating that economic and trade disputes should be resolved through constructive bilateral dialogue rather than unilateral punitive tariffs, and rejected all claims that China maintains systemic unfair overcapacity. The ongoing investigation into China’s industrial capacity is being carried out under Section 301 of the 1974 U.S. Trade Act, a statute that grants the president authority to impose tariffs on nations found to engage in discriminatory practices against U.S. companies and commercial interests.
Crucially, the proposed 7.5% tariff would be levied on top of existing trade duties already applied to Chinese goods. Sources familiar with the internal talks emphasized that Trump has not made a final decision and could still alter or scrap the plan before it is formalized. The new measure would add to the 10% to 12.5% tariffs announced last month targeting 60 global economies that the Trump administration accuses of failing to enforce bans on goods produced with forced labor.
That earlier round of tariffs prompted widespread protests from affected nations, including China, and came into force only after the expiration of temporary tariffs Trump implemented following the Supreme Court’s February ruling that struck down his original broad “reciprocal” tariff plan applied to nearly all U.S. trade partners. Last month, China already publicly pushed back against overcapacity allegations, pre-empting the expected release of the U.S. probe results and the announcement of new tariff measures.
Overcapacity in a wide range of Chinese manufacturing sectors — from automobiles and solar panels to cement and steel — has been a flashpoint for China’s major trading partners for years. While Chinese leaders have made rebalancing the domestic economy a top policy priority, slowing domestic consumer demand has pushed many Chinese manufacturers to expand their footprint in overseas markets. This export surge drove China’s annual trade surplus to a historic high of nearly $1.2 trillion in 2024. In a recently released white paper titled “China’s Position on the So-called Excess Capacity Issue,” China’s Ministry of Commerce stressed that the country has never intentionally pursued a large trade surplus.
The trade deliberations unfolded alongside a separate announcement from the U.S. Treasury Department on Monday, which warned nations engaged in trade with Iran that new secondary sanctions are forthcoming to isolate any jurisdictions that continue commercial activity with Tehran. China is Iran’s largest single trade partner. Washington has stated that the new sanctions will ramp up pressure on Iran’s already crippled economy, which has been battered by years of previous U.S. sanctions and a ongoing U.S.-Israeli military campaign that is approaching its six-month mark. Treasury Secretary Scott Bessent’s Monday announcement offered few concrete details and did not name specific countries that could face sanction measures.