On Tuesday, billionaire investor Bill Ackman suggested that Donald Trump implement a gradual, escalating China tariff strategy to encourage fair trade negotiations and help U.S. companies adjust without triggering sudden economic disruption.
What Happened: Taking to X, formerly Twitter, Ackman laid out a detailed proposal for how Trump could reshape U.S.-China trade relations.
Rather than imposing large tariffs abruptly, Ackman suggests starting with a 20% tariff on Chinese goods and then gradually increasing it:
- By 0.5% per month over the first year,
- By 1% per month in the second year,
- And by 1.5% per month in the third year, continuing in this pattern.
"To the extent that China modifies its unfair trade practices, the increases could stop and potentially be reversed depending upon the degree of improvement in its trade policies," Ackman explained.
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He added, "This approach would incentivize companies to relocate their supply chains from China while enabling them to continue to operate profitably during the transition."
Why It's Important: On the same day as Ackman's proposal, the Trump administration revealed that Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer are set to meet with senior Chinese officials in Geneva, Switzerland, this weekend.
China's Ministry of Commerce released a separate statement warning that if the U.S. were to act contrary to its stated intentions or use the dialogue as a cover for pressure tactics, China would not tolerate such behavior.
A recent poll shows that the trade war has negatively affected President Trump's approval ratings among young Americans, who are frustrated by the price increases caused by tariffs.
The Invesco QQQ Trust, Series 1 (NASDAQ:QQQ) has declined 5.65% so far this year, while the SPDR S&P 500 ETF (NYSE:SPY) has dropped 4.42%, as ongoing uncertainty surrounding the U.S.-China trade conflict continues to dampen investor confidence.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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