US Weighs 7.5% Tariff on Chinese Goods Before Trump-Xi Summit to Address Overcapacity

The United States is considering imposing a 7.5% tariff on Chinese goods before the summit between Chinese President Xi Jinping and US President Donald Trump next month, citing overcapacity in China's manufacturing sector. The exact rate has not been finalised. One option under consideration is to first announce a higher tariff on China but defer implementation of a portion, bringing the effective rate to 7.5%. The scope of the deferred tariffs and the duration of the suspension remain under negotiation. Beijing and Washington are simultaneously seeking to extend their trade agreement, whose one-year trade truce is set to expire on November 10.

In July 2026, the US government imposed a 12.5% tariff on Chinese goods, citing China's insufficient action on forced labour. Beijing criticised the move but did not announce retaliatory measures, stating that Washington had agreed to cap alternative tariffs on Chinese goods at 20%. If the latest rate is added, tariffs imposed on China during Trump's second term would return to about 20%, stacking on top of other tariffs carried over from his first term and the Biden administration.

In March 2026, the Trump administration launched a Section 301 investigation under the US Trade Act of 1974 into 16 economies, including China, on grounds of overcapacity. This is one of two investigations aimed at establishing a more durable tariff mechanism to replace tariffs previously overturned by courts. Trump administration officials hope to release the overcapacity investigation findings before the scheduled September 24 meeting between Trump and Xi in Washington. The details of the report are challenging to handle due to complex legal issues.

US Trade Representative Jamieson Greer said in July 2026 that the overcapacity investigation is complex and will take longer than the separate forced-labour investigation, stressing that the delay in releasing the overcapacity findings is unrelated to maintaining the US-China trade truce. In response to inquiries about the tariff plan, a White House official said any related announcement would be made directly by the US government, and other reports or discussions should be regarded as unfounded speculation. The Office of the US Trade Representative did not immediately respond to a request for comment, and China's Ministry of Commerce did not respond to a faxed inquiry.