Clark Packard, Scott Lincicome, and Alfredo Carrillo Obregon
Following remarks from Treasury Secretary Scott Bessent earlier this week suggesting that a tariff de-escalation with China would be coming soon, the Wall Street Journal on Wednesday reported that the Trump administration is considering slashing its tariffs on Chinese imports to between 50 and 65 percent. Given that the average US tariff rate on Chinese imports currently sits at 124 percent, this cut would provide some relief to a US economy that imported nearly $440 billion worth of goods from China in 2024. Yet, it would nevertheless mean that the average import from China would continue to be subject to rates around two to three times higher than the average tariff rate on Chinese imports when the second Trump administration began—and about 13 to 17 times higher than before the first Trump administration’s trade war with Beijing began in 2018.
American consumers—both individuals and firms—will bear the brunt of these increased taxes. Indeed, for American businesses that rely on imports from China, including American manufacturers for which China is an essential player in their often-complex supply chains, this means that these cuts—which would have been drastic in any other era of US trade policy—do not amount to a significant reprieve from the damage that’s already been done.
To illustrate this point, our Cato colleague Scott Lincicome recently sat down with Rick Woldenberg, CEO of Learning Resources—a Chicago-based manufacturer of educational toys for young children—to discuss the impact of the Trump administration’s tariffs on his business. Woldenberg told Lincicome that his business manufactures about 60 percent of its products in China and that his company had paid $2.3 million on tariffs last year. At current 145 percent rates, he calculates his company’s 2025 tariff liability would increase an astounding 44 times, to $100.2 million. Thus, even if the White House slashed the tariffs to the reported 50 to 65 percent, they would nevertheless continue to represent an unsustainable cost for his business. Lincicome then asks Woldenberg how his company is operating today with the costs and uncertainty hanging over it, and his answers deserve to be heard in full:
Woldenberg raised additional points that further underscore the harms of the White House’s tariffs, the uncertainty they have engendered for businesses like his, and the disconnect of the president’s trade strategy with the reality of modern American manufacturing. Given the fatal risks the tariffs pose to his company, Woldenberg announced during the interview that Learning Resources filed a lawsuit on April 22 challenging the Trump administration’s use of the International Emergency Economic Powers Act to impose tariffs. The full discussion will be available on Cato.org soon.
Let’s hope that decisionmakers in the White House are finally realizing the full extent of the damage that their misguided and hastily crafted tariff plans are inflicting on millions of everyday Americans.