On Monday, U.S. President Donald Trump signed an executive order extending a trade truce with China for 90 days, just hours before sky-high tariffs were set to return. American tariffs on Chinese goods will hold steady at 30 per cent, while Beijing will maintain tariffs of 10 per cent on American goods.
The possibility of even steeper tariffs, which soared as high as 145 per cent in April, will be shelved until November, giving Trump time to meet and negotiate with Chinese President Xi Jinping.
The two leaders have yet to meet since Trump’s re-election, but senior officials from both sides have met, most recently in July. Trump said Sunday that he wants China to quadruple its imports of American soybeans, partly to shrink the U.S.’s trade deficit with China.
In 2023, soybeans were the U.S.’s top goods export to China, followed by crude petroleum. Two ‘blue’ states, Illinois and Minnesota, and two ‘red’ states, Iowa and Indiana, account for half of U.S. soybean production.
There are other signs that Trump is softening on China. On Sunday, it was reported that the White House would allow NVIDIA and AMD, two American chipmakers, to sell artificial intelligence chips to China. As part of the “highly unusual” deal, however, Washington will receive 15 per cent of the companies’ sales of these chips to China.
Critics say the decision undermines U.S. national security and jeopardizes Trump’s own AI action plan, released this month, which pledged to “prevent our advanced technologies from being misused or stolen by malicious actors.”
Death, taxes, and tariffs
Trump’s second-term trade policy has zigged and zagged — blown off course by backtracks, cross-talk, and “implementation blunders” — but there has been one constant: tariffs.
India, long thought safe thanks to Trump’s warm relationship with Indian Prime Minister Narendra Modi, is now grappling with this reality. For now, India faces a 25 per cent tariff, but if no compromise is reached by August 27, it will face a whopping 50 per cent tariff.
Trump announced the additional tariff this week, attributing it to New Delhi’s importing of Russian oil. (China is the biggest importer of Russian energy, but has not been hit with a similar tariff.) New Delhi called the additional tariff “unfair, unjustified, and unreasonable.”
Ties seem to have hit “rock bottom,” due to tariffs, Trump’s position on Pakistan, and haggling over market access. Modi said last week that “India will never compromise on the interests of its farmers, fishermen and dairy farmers.”
In September, Modi is set to host leaders of the ‘Quad’ grouping, comprising Australia, India, Japan, and the U.S.
Crying over spilt milk?
Trump’s demands for market access have also bedevilled Ottawa. Supply management remains a sticking point in trade negotiations between Canada and the U.S., with Trump complaining in June that Canada was “a very difficult country to trade with.” Canadian Prime Minister Mark Carney has said that supply management is “off the table” in any deal.
The U.S. isn’t Canada’s only trade headache. Today, China, Canada’s second-biggest trading partner, imposed a tariff of 75.8 per cent on all Canadian canola-seed exports, following a year-long “anti-dumping probe.”
Beijing’s tariff on canola seed (and its pre-existing levies on canola meal and oil), imposed mere weeks before harvest, is another example of the difficulties Ottawa faces in diversifying trade away from the U.S. while de-risking from China and finding more reliable trading partners.
