The trade conflict initiated by President Trump against China has led to staggering tariffs on goods traded between the two nations, significantly disrupting the operations of various global enterprises that rely on this trade. Sadly, there appears to be no resolution in sight.
The Trump administration has been awaiting a direct phone call from Chinese leader Xi Jinping, yet it seems Beijing is hesitant to put Mr. Xi in a precarious and possibly embarrassing position when dealing with the U.S. president.
With both governments at a standstill, businesses dependent on sourcing from China—ranging from hardware retailers to toy manufacturers—are facing chaos. The drastic tariffs, reaching triple digits, have compelled numerous companies to entirely suspend their shipments.
Tariff rates have escalated quickly under Mr. Trump’s directive, spiking from 54 percent on April 2 to a staggering 145 percent within just a week. In response, the Chinese government contested that these measures were unjust and retaliated by raising tariffs on American products to 125 percent as of Friday.
However, on Friday evening, a notable exemption was introduced by the administration, lifting tariffs on select electronics such as smartphones, laptops, and televisions. These devices will still face other tariffs imposed by Mr. Trump, including a 20 percent fee related to China’s role in the fentanyl trade.
Mr. Trump has expressed a desire for dialogue with Mr. Xi but has refrained from asking for a call, reasoning that it should be up to the Chinese government to initiate. Trump officials have reported that numerous countries have contacted the administration regarding negotiations since the imposition of tariffs. In contrast, China has merely responded with confrontational rhetoric and its own tariffs.
Within the Trump administration, various officials are increasingly anxious that the trade conflict could escalate into a national security issue, pushing China to expedite military plans against Taiwan.
The Pentagon is evaluating the ramifications of China potentially ceasing rare earth exports to the U.S. and possibly obstructing critical components used in U.S. weaponry. This assessment aims to understand the potential damage to America’s military production and maintenance capabilities.
Despite the turmoil, Mr. Trump maintains a hopeful outlook, claiming he has always had a cordial relationship with Mr. Xi and that something positive will emerge from their dealings. Yet analysts warn that the circumstances may already be beyond control.
Julian Evans-Pritchard, Capital Economics’ head of China economics, noted that the repeated response of Chinese authorities to U.S. tariff increases suggests they are in no hurry to negotiate.
“A partial rollback of tariffs seems plausible at some point,” he stated, “but envisioning a significant reset in the U.S.-China relationship remains challenging.”
During a briefing on Friday, Karoline Leavitt, the White House press secretary, avoided confirming whether any communications were occurring between the two countries.
“I won’t comment on any existing or potential communications; that’s better left to our national security team,” she remarked. She mentioned that the president is optimistic and has clearly indicated his openness to a deal with China.
Last week at the White House, Mr. Trump noted that “China is eager to cut a deal, but they are uncertain on how to proceed.” He remarked they are “proud people.”
Mr. Trump’s actions have heightened tariffs to a level beyond what is feasible for trade, putting many American businesses that depend on Chinese imports into crisis.
Rick Woldenberg, who operates Learning Resources, an Illinois-based producer of educational toys, stated that the recent tariffs have already compelled him to suspend certain shipments from China. He described the imposed rates by Mr. Trump as “absurd,” claiming that even concessions from suppliers couldn’t sufficiently offset the tariffs owed to the U.S. government.
Learning Resources collaborates with manufacturing partners in Taiwan, India, Vietnam, and other nations, but China remains its largest supplier, mirroring the dependence of most toy manufacturers. Last year, China was responsible for two-thirds of all toy and sporting goods imports to the United States.
Employing around 500 individuals, mainly in the U.S., Learning Resources had intended to expand its workforce this year in response to its rapidly growing business, but those plans have been scrapped.
“We’re being suffocated by our own government,” Mr. Woldenberg lamented.
In 2024, Mr. Woldenberg reported he paid roughly $2.3 million in tariffs and duties. This year, should sales remain in line with his pre-trade war projections, his total tariff payments would exceed $100 million—sum insurmountable without slashing every expense except basic payroll.
At this stage, Mr. Woldenberg emphasized that the specific figure hardly holds significance—beyond a certain threshold, the tariff becomes unaffordable for anyone in his industry.
“He could raise it to 100 billion percent—it wouldn’t matter,” he stated. “It’s analogous to a legal ban.”
Christophe Lavigne, president of Highfield, which produces boats in both China and the U.S., foresaw tariffs on some imports reaching 198 percent, leading him to halt shipments for now.
He expressed that the fate of his company, including the jobs of his employees and dealers, hangs in the balance. The speed of changes has been excessively rapid and unpredictable, he explained.
“We cannot adapt our production lines swiftly enough,” he asserted. “Transforming our entire supply chain within just two months is unrealistic.”
While major multinational corporations have been in a better position to source products from countries other than China, they are still feeling the impact. Hobby Lobby, the crafting retailer, notified its vendors on Thursday that it would be delaying shipments from China due to the intensifying trade conflict, as per correspondence reviewed by The New York Times.
The retailer informed vendors that the back-and-forth tariffs had led to “a rapidly evolving and uncertain environment,” expressing hope that diplomatic efforts between the U.S. and China would “result in a more stable and balanced outcome.”
The repercussions of disrupting trade with one of America’s largest trading partners are reverberating throughout the economy. On Friday, the dollar dropped to a three-year low, and Treasury yields remained volatile. A gauge of consumer sentiment also saw a significant decline, indicating growing apprehension among Americans about how increased tariffs may affect them.
Mr. Trump unexpectedly declared on Wednesday a 90-day moratorium on the “reciprocal” tariffs he had introduced just a week prior, which had taken effect only hours earlier. Nonetheless, the looming threat of these tariffs and potential retaliation against U.S. exports continues to weigh heavily on the global economy.
It remains uncertain whether the U.S. and China will look to achieve a resolution soon. Sources familiar with the discussions revealed that members of the White House National Security Council have been in communication with counterparts at the Chinese Embassy, and that Cui Tiankai, the former Chinese ambassador, had conducted meetings in Washington and New York over the past several weeks to discuss the relationship. However, there has been little evidence of dialogue between higher-ranking officials in the Trump administration and the Chinese government.
At the outset of Mr. Trump’s first term, Mr. Xi visited Mar-a-Lago in Florida to meet with Mr. Trump for an extensive discussion, showcasing what Mr. Trump later described as “the most beautiful piece of chocolate cake you’ve ever seen.” Yet this did not prevent the two countries from descending into a damaging trade war. In Mr. Trump’s second term, his unpredictability and assertiveness have intensified.
Mr. Trump has not publicly articulated what he expects from China. Nonetheless, Trump officials maintain that the issues at stake are well established. A report released by the Office of the United States Trade Representative on March 31 elucidated the trade barriers faced by U.S. businesses in foreign markets, with nearly 50 out of 400 pages dedicated to the situation in China.
In recent weeks, aside from countering Mr. Trump’s tariff threats, China has placed several U.S. companies on an unreliable entity list, effectively barring them from operating within China. Furthermore, it has imposed licensing systems to limit the export of rare earth elements imperative for products like electric cars.
As of Friday, when the latest tariffs on American products were announced, the Chinese government declared it would refrain from further increasing tariffs as the existing rates were so exorbitant that the numbers held little significance.
China’s Ministry of Commerce accused the United States of using tariffs as a tool of “bullying and coercion” and claimed it had turned into “a laughingstock.”
“If the U.S. persists in its tariff escalation, China will ignore it,” it warned.
In addition, China intensified its pressure on U.S. companies by issuing new regulations that would impose higher tariffs on semiconductors produced by U.S. firms overseas.
This strategy will place additional pressure on companies such as Intel and Global Foundries that operate chip factories in the U.S. It may also incentivize chip manufacturers to relocate production outside the U.S. to preserve their access to the Chinese market, a significant hub for global electronics.
Shawn McCreesh, Maggie Haberman, Karen Weise, Tony Romm and Jonathan Swan contributed reporting.
