President Donald Trump has given the trade war a truce of at least another 90 days. This important decision leaves room for further negotiations to go forward, without removing the current 30% tariffs on Chinese imports. The extension, announced by Beijing’s Ministry of Commerce, was crucial as the previous deadline was set to expire at 12:01 a.m. on Tuesday. This action seeks to institutionalize the template for future trade pacts between the two economic heavyweights.
The U.S. budget deficit exploded by a whopping 20% in July over the year-ago month. Tariff revenue was at record highs during this time frame. In fact, the Congressional Budget Office estimates that Trump’s massive, protectionist tariff plan could reduce deficits by $2.8 trillion over the next 10 years. Unfortunately, Washington is still spending far more than the federal government takes in. July customs revenue was up a staggering 273%. This blitz resulted in a whopping $21 billion more than the 2020 edition.
The Trump administration’s tariff strategy, initially designed as a means to negotiate trade terms with China, has generated significant revenue. These estimates find that tariff proposal would bring in about $1.3 trillion over the course of Trump’s four-year presidency. Economists warn that estimating tariff revenue is still difficult, as Trump has repeatedly changed tariff rates.
Scott Bessent, an economist, expressed concerns over the growing deficit, stating that there needs to be a concerted effort to manage federal spending and budgetary policies.
“We are laser-focused on bringing this deficit down.” – Scott Bessent
Trump doubled down on his hard line on the China trade deal. He specifically noted that “everything else in the Agreement will stay the same.” The Trump administration has granted this same trade truce as one piece of a larger strategy. As the most important element of their trade agenda, they want to negotiate new bilateral trade agreements with China and other large economies.
