Trump’s U.S. – China Tariff Pause is Pointless

Pausing Tariffs Does Nothing to Reshore American Factories

On May 12, 2025, the White House issued a joint statement with China on trade, in which the countries have “paused” the trade war for 90 days.

More specifically, the United States has slashed tariffs from 145 percent to an effective rate of 30 percent. China has likewise slashed tariffs from 125 percent to an effective rate of 10 percent. Tariffs remain on certain industries including steel, aluminum, and automobiles. Other licensing deals respecting rare earth minerals and semiconductors remain in place.

This deal is a mistake.

A 90-day pause does nothing but burn precious political capital, waste time, and signal to businesses that the Trump Administration is not serious about reshoring.

If President Trump is serious about reindustrialization, then he needs to commit to high and stable tariffs. If not, he will poison the public against tariffs for another generation, and “Liberation Day” will go down in history as just another tax scam.

Cicero’s Wisdom

On April 2, 2025, President Trump announced he would impose reciprocal tariffs to liberate America from China. He promised to reshore America’s displaced industry and make America economically self-sufficient—just as the Founding Fathers intended.

In the coming days American and foreign companies pledged over $5 trillion worth of new investments—everything from a new steel mill in Louisiana to a new semiconductor factory in Arizona. The tariffs were working.

Nine days later President Trump paused the tariffs for 90 days. Why? To buy time for negotiations—negotiations with the same countries who have been happy to rip us off for decades. And just like that the investment announcements dried up.

To make matters more complicated, the tariffs were raised even higher on China during the pause. Companies like Apple announced that they were divesting from China, and instead opening factories in India—not America—India. Apparently, President Trump’s tariffs were working, just not for Americans!

Now President Trump has paused the tariffs on China too.

This confusion has set the stock market on fire—pensioners watched their 401K’s go up in smoke. Trillions worth of market capitalization was burned. Businesses have walked back their investment pledges to see where things settle. The markets are confused, businesses are frustrated, and the people are growing worried.

What is the point?

If tariffs are about reshoring America’s factories and creating middle class jobs—as I argue in my bestselling book Reshore: How Tariffs Will Bring Our Jobs Home & Revive the American Dream—then pausing the tariffs is not only pointless, it is destructive. President Trump’s flip-flopping is burning the political capital that he needs to sell tariffs to the American people, and it is showing businesses that America is not a stable market in which to invest.

As Marcus Tullius Cicero said: “more is lost by indecision than wrong decisions.” President Trump needs to commit to high and stable tariffs—the price of stability is more valuable than scaring an extra concession or two out of our reluctant trade partners.

In Praise of Boring

America needs stable tariffs. A local manufacturer like Delany Flush Valves cannot risk spending millions to restart their foundry in Charlottesville, VA, if the tariff rate changes every week. Nor will a company like Apple invest billions in new factories in Arizona. Instead, companies like Apple will try to ride out the storm—probably with the help of foreign governments who are keen to maintain their toeholds in America’s market.

President Trump needs to pick a flat tariff and stick to it. Alternatively, he could announce gradually increasing tariff rates four years into the future, to give manufacturers time to reshore their production to America. Either way, businesses need stability. This is not optional.

America also needs high tariffs. How high? High enough to make reshoring economical. If it is cheaper to build factories in China or Vietnam and simply pay the tariff, then the tariff will do nothing other than raise revenue. As Charles Benoit, trade counsel for the Coalition for a Prosperous America, has emphasized: tariffs are about reindustrializing America—not moving factories from China to India.

What is the optimal rate? Time will tell—but unfortunately time is not on the President’s side.

What we do know is that during the pause we saw businesses scramble to move production from China to India or Vietnam—not back to America. What this means is that the 10 percent flat rates is too low. The rate needs to be high enough to force manufacturers to reinvest in America, as was the case with the initial “reciprocal” tariffs—most of which were over 40 percent.

We also know that the cost of manufacturing in China is typically between 40 and 60 percent lower than in America. This is not because Chinese factories are more efficient—in fact, American workers are 2 – 3 times more productive than their Chinese counterparts.

Instead, it is because of other factors such as the cost of energy. For example, in China the average price of electricity is $0.08/kWh. Meanwhile, in America, the price is $0.13/kWh—a cost difference of 61 percent. Likewise, the cost of raw materials is 10 – 15 percent cheaper in China due to a focus on local production and producing at or below cost. If tariffs are not high enough to balance these cost differences, then reshoring will not occur.

Accordingly, the tariffs need to be at least 60 percent to make meaningful headway in reshoring factories. Further, they need to be high enough across the board that companies will not simply move from China to India.

Although this rate sounds high, we need to remember that America’s tariff rate throughout the Nineteenth Century was over 30%—and this was before forklifts and container ships. It would need to be higher now to achieve the same result. More recently, South Korea industrialized with average protective tariffs of roughly 40%—and they also had the advantages of a weak currency and cheap labor.

This is not the case for America today. Tariffs need to make up the difference. And this is all to say nothing of the fact that China steals hundreds of billions worth of American technology every year.

China does not case about America’s industry or the American people. China cares about China. Period.

There is no point in negotiating with China. Why? Any deal that does not bring the factories home is a bad deal—and China would never agree to this deal. Not in a million years.

President Trump needs to stop pussyfooting and dig his heels in the sand. Stand firm on tariffs—reshore the factories—revive the American Dream.