Trump Imposes Up to 54% Tariffs on China
"TikTok Is a Good Example of Tariffs as a Bargaining Tool"
Pivotal Day Approaches as U.S. and China Remain Far Apart
U.S. President Donald Trump announced on the 3rd (local time) that the Chinese government would ease tariffs on Chinese imports, which can reach up to 54%, if it approves the sale of TikTok.
According to U.S. news agencies including Reuters, President Trump told reporters aboard Air Force One the day before, "TikTok is a good example of how tariffs can be used as a bargaining tool," expressing this view. He confidently stated that the Chinese government would request tariff adjustments in exchange for approving the TikTok deal, adding, "We can use tariffs as leverage to get something."
The Chinese video application (app) company TikTok is owned by the Chinese parent company ByteDance. To avoid being banned in the U.S., it must sell its shares to a company outside China by the 5th. This is due to the 'TikTok Ban Act' passed by the U.S. Congress in April last year. TikTok must reduce ByteDance's stake to below 20% to continue operating in the U.S. The TikTok Ban Act has also been upheld as constitutional by the U.S. Supreme Court.
President Trump said, "The TikTok-related deal is almost finalized, and several investors are involved." According to CBS and the Financial Times (FT), private equity firm Blackstone, tech company Oracle, and venture capital (VC) firm Andreessen Horowitz were mentioned as candidates for acquiring shares. Bloomberg reported that even the major retailer Amazon joined the final bidding.
Market analysts point out that the approval of the TikTok acquisition negotiations requires the consent of both the Chinese government and ByteDance. Bloomberg identified the "TikTok content recommendation algorithm" as a decisive variable. Bloomberg noted, "According to the U.S. TikTok Ban Act, for TikTok to continue operating in the U.S., ByteDance must completely relinquish control over the algorithm and data sharing, but the Chinese government is firmly opposed to the overseas transfer of such core technology," highlighting the gap between the two governments' positions.
President Trump's remarks on the TikTok sale came right after he announced the imposition of a basic 10% tariff on all U.S. imports and higher tariffs of up to 49% on countries with large trade surpluses with the U.S., referred to as 'worst countries.' China faces tariffs of up to 54% on certain items, combining the additional 20% tariff with the current 34%. It is widely expected that the actual impact will be even greater. Citi Research recently reported, "Due to the U.S. reciprocal tariff announcements and the end of the de minimis exemption, the effective U.S. tariff rate on China has risen to about 65%, which is an unbearable tariff level in U.S.-China trade."
The Chinese government clearly expressed its intention to take retaliatory measures in response to the U.S. reciprocal tariff announcement. A spokesperson for the Chinese Ministry of Commerce said in a statement regarding the U.S. reciprocal tariff announcement, "This is a typical unilateral bullying act that does not comply with international trade rules and seriously undermines the legitimate and lawful rights and interests of the relevant countries."
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