US President Donald Trump is considering imposing an additional 7.5% tariff on Chinese goods over concerns about excess manufacturing capacity, a move that could take the effective second-term US duties on China to around 20%.

The proposal comes ahead of a planned meeting between Trump and Chinese President Xi Jinping in September and could add fresh uncertainty to global trade relations.

The proposed tariff follows a Section 301 investigation launched by the Trump administration into excess industrial capacity across China and several other major trading partners.

The US has raised concerns that China’s large production capacity in sectors such as automobiles, solar panels, steel and other industrial goods is leading to cheaper exports and putting pressure on manufacturers in other countries.

If implemented, the additional 7.5% duty would bring Trump’s second-term China tariffs to roughly 20%, a level that Beijing has previously indicated could remain consistent with the existing US-China trade truce. However, the exact tariff rate has not been finalised and Trump could still change the proposal before an official announcement.

The timing of the proposal is particularly important. Washington and Beijing are working to extend their current one-year trade truce, which is scheduled to expire on November 10. Trump and Xi are also expected to meet in Washington on September 24, with US officials hoping to publish the findings of the overcapacity investigation before the summit.

The potential tariff could therefore be seen as a balancing act by Washington. On one hand, the US wants to address concerns over Chinese industrial overcapacity and protect domestic manufacturers. On the other, officials appear keen to avoid a major escalation that could disrupt the trade truce or undermine the planned Trump-Xi meeting.

China has rejected the US allegations of overcapacity and has argued that trade and economic disputes should be resolved through bilateral discussions rather than unilateral tariff measures. Beijing has also pointed to its efforts to rebalance the domestic economy as global demand and China’s export growth continue to attract scrutiny.

The proposed measure would also come on top of other US tariffs. Last month, the Trump administration announced tariffs of 10% to 12.5% on goods from around 60 economies over concerns related to enforcement of restrictions on forced-labour products. Chinese goods would therefore continue to face multiple layers of trade duties depending on the product category.

For global markets, the development could increase uncertainty for companies dependent on US-China supply chains, particularly in electronics, automobiles, solar equipment, industrial goods and other manufacturing sectors. Higher tariffs could raise import costs for US businesses, while Chinese exporters may face greater pressure to find alternative overseas markets.

The proposal also comes against a wider backdrop of rising US-China economic tensions. China’s trade surplus reached nearly $1.2 trillion last year, as weaker domestic demand encouraged Chinese companies to expand overseas sales. This has intensified concerns among trading partners about the impact of China’s manufacturing capacity on global markets.

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