US Considers New 7.5% Tariff on Chinese Goods Over Excess Industrial Capacity

US President Donald Trump is considering a new 7.5 per cent tariff on Chinese goods amid growing concerns over excess industrial capacity and underpriced exports, according to individuals familiar with the internal deliberations.

The potential move follows formal investigations launched in March under Section 301 of the Trade Act of 1974. These probes targeted excess industrial capacity and forced-labour regulations in China and other economies, following a Supreme Court decision earlier this year that struck down a previous sweeping tariff scheme.

According to sources who spoke on condition of anonymity, administration officials believe the 7.5 per cent rate is calibrated to avoid endangering a one-year trade truce between Washington and Beijing. It is also seen as unlikely to disrupt a planned White House meeting between Trump and Chinese President Xi Jinping scheduled for late September. However, sources noted that the president could still alter his decision regarding the proposed tariff.

The deliberation comes on top of tariffs ranging from 10 per cent to 12.5 per cent announced last month for 60 economies accused of failing to effectively enforce bans on goods produced with forced labour. China and other trading partners previously protested those measures, which took effect after temporary tariffs expired.

China's excess industrial capacity across sectors such as autos, solar panels, cement, and steel manufacturing has drawn scrutiny from global trading partners. While Chinese leaders have stated an aim to rebalance the economy, slowing domestic demand has led companies to increase overseas expansion, pushing China's trade surplus to a record of nearly USD 1.2 trillion last year. The Chinese Ministry of Commerce recently pushed back against overcapacity claims in a published report.

Meanwhile, the US Treasury Department has warned of new secondary sanctions targeting countries that continue to conduct trade with Iran. China remains Iran's largest trading partner, though Treasury Secretary Scott Bessent's recent announcement did not specify which nations might face secondary sanctions as pressure mounts on the Iranian economy.

The White House, the US Trade Representative's office, and the Chinese embassy in Washington did not immediately respond to requests for comment on the ongoing tariff deliberations.

"Tariff adjustments and trade policy shifts of this magnitude directly impact global supply chains, manufacturing costs, and cross-border commerce. For businesses operating internationally, particularly those dependent on hardware, manufacturing, or cross-border trade between major economies, these developments introduce regulatory variables that require careful supply chain diversification and financial planning to manage potential cost fluctuations." — Dr. Shishir Gupta, Founder & CEO, StartupLanes