by Michael Snyder, The Economic Collapse Blog:
Everybody is so happy right now. The Dow Jones Industrial Average was up more than 1,000 points today, the talking heads on television are bubbling over with optimism, and even many of President Trump’s harshest critics are cheering. It warms my heart to see everyone so happy, and so there is part of me that is not inclined to dump rain on everyone’s parade. But I am not going to tell people what they want to hear just to tickle their ears. I have got to tell the truth about the agreement that has just been made with China, and the truth is not all rainbows and lollipops.
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First of all, we don’t actually have a “trade deal” with China. What we have is a 90 day “cooling off period” during which we could potentially negotiate a “trade deal” with China.
There is an enormous difference between those two things.
For 90 days, both sides will reduce tariffs dramatically.
Without a doubt, that is a good thing.
If we had continued to impose a 145 percent tariff rate on most Chinese products, there would have been empty shelves and shortages all over America.
Thanks to this “cooling off period”, we have been able to avoid such a scenario at least for now.
During the “cooling off period”, there will still be tariffs.
Most U.S. exports to China will be hit with a 10 percent tariff rate.
That is definitely a win.
Major news outlets are reporting that most Chinese exports to the United States will be hit with a 30 percent tariff rate during the “cooling off period”, but that is not accurate.
On the War Room, Jason Miller explained what is actually happening. According to Miller, “we have 50 percent tariffs on China, they have 10 percent on us”.
He got to that figure by adding the 10 percent baseline tariff rate plus the 20 percent fentanyl tariff rate plus the 20 percent tariff rate from Trump’s first term.
And this is actually confirmed on the official White House website. It states that the only tariffs that are being removed by the United States are the “additional tariffs” that were imposed on April 8th and April 9th…
The United States will remove the additional tariffs it imposed on China on April 8 and April 9, 2025, but will retain all duties imposed on China prior to April 2, 2025, including Section 301 tariffs, Section 232 tariffs, tariffs imposed in response to the fentanyl national emergency invoked pursuant to the International Emergency Economic Powers Act, and Most Favored Nation tariffs.
So that leaves us with a 50 percent tariff rate on Chinese imports during the “cooling off period”, and that is about where U.S. officials were projecting that we would end up.
According to U.S. Treasury Secretary Scott Bessent, the current tariff rate on Chinese imports is a “floor”.
In other words, even if a permanent trade deal with China is reached, we shouldn’t expect the tariff rate on Chinese imports to go any lower.
Bessent is also telling us that the U.S. is purposely making a strategic decision to become less dependent on Chinese products…
Treasury Secretary Scott Bessent said Monday that the trade agreement reached over the weekend represents another stage in the U.S. shaking its reliance on Chinese products.
Though the U.S. “decoupling” itself from its need for cheap imports from China has been discussed for years, the process has been a slow one and unlikely to ever mean a complete break.
However, Bessent said there are now specific elements of decoupling in place that are vital to U.S. interests.
So things are never going to go back to the way they once were.
The Trump administration is framing this “cooling off period” with China as a big win, and stock prices absolutely soared today.
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