Despite recent signals from Washington hinting at potential tariff reductions, China has firmly denied any progress in trade talks, calling for the full removal of U.S. tariffs. As tensions between the world’s two largest economies deepen, the trade conflict enters a critical phase.
China’s Stern Response to U.S. Overtures
In the latest development of the ongoing U.S.–China trade dispute, Beijing on Thursday issued a sharp response to Washington’s recent moves, insisting that all imposed tariffs must be lifted. Spokesperson for China’s Ministry of Commerce, He Yadong, stated:
“If the United States truly wants to resolve the issue, it must completely remove all unilateral tariffs.”
He also labeled reports of negotiation progress as “baseless.”
PBOC Governor Warns of Global Fallout
Echoing Beijing’s tough stance, Pan Gongsheng, Governor of the People’s Bank of China, warned of the broader consequences of escalating global trade tensions. He cautioned that rising friction could lead to a climate of “high conflict and low trust,” urging stronger international economic cooperation, especially as U.S.–China talks remain deadlocked.
Markets React: Investor Confidence Wavers
Markets pulled back on Thursday following a rally the day before, which had been fueled by optimism over easing tensions. The decline came after U.S. Treasury Secretary Scott Bessent refuted claims that the administration was planning unilateral tariff cuts.
“This is equivalent to an embargo,” Bessent said, emphasizing that current tariff levels are unsustainable.
Trump Softens Rhetoric, Signals Tariff Cuts
Despite the official denial, President Donald Trump struck a more conciliatory tone on Tuesday. He described the current 145% tariff level as “too high” and promised it would be “substantially lowered.”
He added that he intends to be “very nice” to China in order to reach a comprehensive agreement.
Tit-for-Tat Tariff Escalation Continues
As the dispute intensifies, China has raised its tariffs on U.S. goods from 84% to 125%, while the U.S. maintains a complex tariff structure: a 125% reciprocal rate, a 20% fentanyl-related tariff, and Section 301 duties ranging from 7.5% to 100%.
These escalating measures are having global repercussions, particularly in supply chains.
Tesla Flags Disruption Amid Rare Earth Restrictions
Tesla (TSLA) became one of the first major companies to publicly acknowledge the trade war’s impact. In its latest earnings report, the company revealed that production of its Optimus home robot was disrupted due to China’s recent export restrictions on rare earth elements.
Progress With India: A Diversification Strategy
While tensions with China persist, the U.S. is actively seeking to diversify its international trade partnerships. This week, U.S. Vice President J.D. Vance and Indian Prime Minister Narendra Modi announced tangible progress in key areas such as technology, energy, and defense.
Trump Mulls Exemptions as Core Tariff Stays in Place
Reports suggest that President Trump may grant exemptions for certain auto parts, following his earlier suspension of tariffs on selected consumer electronics. Still, he reaffirmed that these tariffs are ultimately intended to be implemented.
The baseline 10% tariff that went into effect on April 5 remains in force for all applicable imports.
Conclusion: Uncertainty Looms Over Global Trade
The current state of U.S.–China trade relations not only remains tense, but also suggests that a swift resolution is unlikely. Global investors are closely watching the developments, as each policy move carries significant implications for international markets, supply chains, and consumer pricing.
