Trump moves toward levying new tariff on China for flooding market with
cheap goods, AP sources say
[August 25, 2026] By
AAMER MADHANI
WASHINGTON (AP) — President Donald Trump is moving toward levying a new
tariff on China that would penalize the world’s second-largest economy
for flooding the global market with underpriced goods, according to
three people familiar with the matter.
Two of the people, who spoke on condition of anonymity to discuss
internal deliberations still being finalized, said Trump is considering
setting the new tariff at 7.5%. It's a level administration officials
believe would not endanger the one-year trade truce between Washington
and Beijing or a planned White House meeting between Trump and Chinese
President Xi Jinping expected to take place in late September.
The move, if finalized, appears to be a calibrated effort by the White
House to work around a Supreme Court decision earlier this year that
struck down Trump's plan to implement a sweeping, high-tariff scheme not
seen since the 1930s.
After that decision, the Trump administration announced in March it was
launching formal investigations targeting excess industrial capacity and
forced-labor regulations in China and other nations.
It isn't clear if the U.S. administration is also nearing its decision
in its probes of the other economies that it announced it was
investigating for unfair trade practices, including the European Union,
Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand,
South Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan and India.
The White House and the U.S. Trade Representative’s office did not
respond to requests for comment on the tariff deliberations, which
Bloomberg News reported earlier Monday.
The Chinese embassy in Washington said in a statement that economic and
trade issues should be resolved through bilateral talks rather than
unilateral tariff actions, and rejected the idea that it has an issue
with overcapacity.
The excess industrial capacity probe of China was initiated under
Section 301 of the Trade Act of 1974, which allows the president to levy
tariffs against nations that discriminate against U.S. companies or
commerce.
The new tariff would come on top of existing tariffs on China
The people familiar with the deliberations stressed that Trump could
still change his mind on the new tariff on China.
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 It would come on top of tariffs of
10% to 12.5% announced last month for 60 economies around the globe
that the Trump administration accused of failing to effectively
enforce a ban on goods produced with forced labor.
Many countries, including China, protested that move, which took
effect just as the clock ran out on temporary tariffs Trump had
turned to after the Supreme Court in February struck down sweeping
“reciprocal” tariffs he levied on nearly every U.S. trade partner.
China last month pushed back against claims of overcapacity,
anticipating that the U.S. would soon release results of its probe
and impose new tariffs.
Massive capacity in a slew of Chinese industries, from autos to
solar panels, cement and steel manufacturing, has drawn increased
attention from Beijing’s trading partners in recent years.
Although China’s own leaders have prioritized rebalancing the
economy, slowing domestic demand has prompted companies to expand
into overseas markets. Surging exports pushed China’s trade surplus
to a record of nearly $1.2 trillion last year.
China has never sought a large trade surplus, the Ministry of
Commerce said in a recently published report titled “China’s
Position on the So-called Excess Capacity Issue.”
The deliberations come as the Treasury Department on Monday warned
countries doing trade with Iran that new secondary sanctions are in
the pipeline aimed at ostracizing nations that continue to do
business with Tehran. China is Iran's biggest trade partner.
Washington has promised the new sanctions would put even more
pressure on an Iranian economy already battered by previous
sanctions and a U.S. naval blockade as the U.S. and Israeli war
against Iran nears the six-month mark.
Treasury Secretary Scott Bessent's announcement Monday provided
little detail and did not name which countries could face secondary
sanctions.
___
AP writer Paul Wiseman contributed reporting.
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