The Trump administration is preparing another tariff move against China, this time focusing on Beijing’s growing production of cheap goods that are being sold across global markets, according to Bloomberg.
The move could come before a planned meeting between President Donald Trump and Chinese President Xi Jinping next month. If finalised, it would bring Trump’s second-term tariffs on China to around 20%.
At the same time, Washington is starting a major new sanctions campaign against Iran. Together, the two moves mark one of the most consequential weeks yet in Washington’s campaigns to reshape global trade and squeeze adversarial economies, with ripple effects likely to impact the West Asia crisis and major trading sectors.
The White House has not confirmed details, saying that any tariff announcement would come directly from the administration, and called reports or discussions about the plans “baseless speculation.”
US considers 7.5% tariff on China
Trump is considering a new 7.5% tariff on Chinese goods, according to Reuters. The rate is being considered as a way to put pressure on China without damaging the fragile one-year trade truce between Washington and Beijing. It could also help keep alive plans for a meeting between Trump and Chinese President Xi Jinping at the White House in late September.
Washington is now targeting China’s excess production and the low-priced goods flooding global markets, rather than directly responding to Chinese tariffs.
The proposed tariff would come on top of the 10% to 12.5% tariffs Washington imposed last month on goods from around 60 economies. Those countries were accused of failing to enforce a ban on products made using forced labor.
China criticised the move but did not announce retaliatory tariffs. Instead, Beijing said Washington had agreed that total additional tariffs on Chinese exports would not go above 20%.
“We hope that the US will honour its commitments, ensuring that regardless of the reasons given for imposing or replacing tariffs on China in the future, US tariffs on China will not exceed the levels outlined in the Kuala Lumpur trade consultations,” China’s Ministry of Commerce said in a May statement.
That measure came into effect after an earlier set of broad “reciprocal” tariffs expired. The Supreme Court had struck down the earlier tariffs in February.
Meanwhile, China has already rejected the findings behind the overcapacity concerns and is preparing for Washington to act on the results of its trade investigation.
Which Chinese industries could be hit?
Steel and aluminium are among the main areas in focus. China produces more than half of the world’s steel. But after the country’s property market slowed, domestic demand fell while production did not fall at the same pace. That left China with a large surplus that could then be sold overseas.
Electric vehicles are another major concern. Years of heavy investment have left Chinese EV companies operating below the level needed to make full profits. China has also become the world’s biggest car exporter, helping its manufacturers sell more vehicles overseas instead of cutting production.
Solar panels and lithium-ion batteries have already been major areas of tension. The US has targeted some of these products with Section 301 tariffs, while the European Union has carried out its own investigations into Chinese subsidies.
Petrochemicals, machinery and electronics could be another sector. Even Chinese officials have started talking about “involution,” a term being used for destructive price competition that is spreading beyond the country’s clean-energy industries.
Because the proposed tariff is being linked specifically to price distortion and overproduction, it is expected to focus on these strategic industries rather than cover all Chinese goods.
Why US soybean farmers could be hit
American farmers are not directly targeted by the proposed tariff, but they could still feel its impact if China retaliates.
China is the world’s biggest soybean importer and has traditionally been the biggest buyer of US soybeans. During the last major US-China trade fight, China almost stopped buying American soybeans for about six months in 2025.
A later agreement brought those purchases back. Under that deal, Beijing agreed to buy at least 25 million metric tons of US soybeans every year through 2028.
Even now, however, US Department of Agriculture data shows that Chinese purchases remain below the levels seen before the trade war. The soybean agreement also depends on Chinese state-owned trading companies deciding to follow through.
If China responds to the new 7.5% tariff, American agricultural products such as soybeans, pork and beef could again become targets. China has used these products in retaliation during earlier rounds of the trade war.
That could leave US farmers paying the price for a tariff that is supposed to target Chinese industrial overproduction.
Why the China tariff comes as Iran faces new sanctions
The China tariff discussions are taking place at the same time as Washington is stepping up pressure on Iran. Treasury Secretary Scott Bessent announced an “economic asphyxiation” campaign on Monday. The plan includes a new round of financial sanctions and diplomatic pressure aimed at cutting Iran’s remaining links to the global economy.
Bessent did not say which countries or trading partners could be targeted next, or when those measures would come. He said Trump was personally speaking to other world leaders and asking them to join the pressure campaign.
Bessent has also argued that completely isolating Iran financially could reduce the need for major additional US military action.
Iran has responded strongly.
The country’s top security officials have promised to “neutralise the economic war” and have threatened to restrict the flow of oil through the Strait of Hormuz.
Iran has also warned neighbouring countries that work with Washington on the pressure campaign could see their own interests targeted.
The Iran sanctions could have a quicker impact on West Asia than the new China tariff. Disruptions in the Strait of Hormuz and Iran’s threat of further restrictions could push global oil prices higher. Gulf countries with ties to Iran have also been warned, raising tensions with Saudi Arabia, the UAE and other oil producers trying to avoid being pulled into the conflict.