Trump floats lower tariffs in China. What does the price mean?

President Donald Trump on Friday voiced a willingness to facilitate tariffs in China, said that on social media it was “true” to cut levies from 145% to 80%.

The announcement arrives the day before Minister of Finance Scott Bessent will begin trade negotiations with Chinese officials at a meeting in Geneva, Switzerland.

The potential reduction of tariffs floating by Trump can prevent traffic jams virtually between the two largest economies in the world, but that step will not substantially reduce the expected price increase for goods such as clothing, sneakers and toys, analysts told ABC News.

Product shortages will also remain a possibility at a lower rate of tariff, they added.

“The 80% tariff will still have a dramatic effect,” Christian Vom Lehn, an economic professor at Brigham Young University, told ABC News. “This means a significant impact on consumers.”

Trump last month sharply increased tariffs in China, encouraging China to reply with a rate of 125% for US goods. The steps of Tit-For-Tat triggered a trade war with the third largest US trading partner, which contributed imports worth nearly $ 440 billion ago.

The tariff raises a warning from many companies about the risk of price increases for US buyers.

The Mattel toy giant warned in this week’s income report plan to shift some of the supply chains outside China, adding that if necessary, it would take “pricing actions in its US business.” This step follows a similar message from the Best Buy electronic chain and Chinese e-commerce retailer Shein and Temu.

China’s shipment to the US has dropped significantly, down 21% in April compared to the previous year, data from China’s general administration on Friday showed.

Risks for consumers will continue to linger for two main reasons, analysts say: 80% tariffs will still mean taxes that punish imports, while uncertainty about the possibility of shifting other policies will make it difficult for the company to take full profit from lower rates.

Rates increase prices for consumers if the importer fails to swallow tax burden by taking their profits or asking suppliers to sell products at a lower level to compensate for cost shares.

Under the current 145% tariff for Chinese goods, suppliers and importers face a large pressure when they try to bear part of the tax cost due to fears that higher prices will damage sales, experts told ABC News. However, because of the sky -high rates, many sellers have a few choices besides raising prices or risk losses, added them.

The dynamics will continue to apply at the tariff level of 80%, because it will still be far exceeding the company’s capacity to balance additional costs with lower profits, Jason Miller, a professor of supply chain management at Michigan State University.

“The 80% tariff is really not changing many things,” Miller said.

Trump’s announcement of the potential for tariff reduction in China arrived two days after Trump set aside the reduction in the rate of tariffs before negotiations.

Development follows back and forth for weeks in which both parties denied whether they had begun to discuss tariffs.

The sense of general uncertainty will remain even after the US tariff reaches 80%, so it is difficult for businesses to adjust their supply chains in a way that will be substantially facilitating costs and, in turn, offering help for consumers, some analysts say.

“Even with a lower rate, the company must ask questions whether this might rise again or or may fall again,” David Andolfatto, an economist at the University of Miami, told ABC News.

If the company can trust the 80% tariff level that may be a long -term policy attitude, they can choose to change the supply chain outside China or even start plans for some domestic production, Andolfatto said.

But every announcement of the trading policy submitted by Trump seems to be changing, said Andolfatto, noted several modifications that have been made by Trump.

“If something has changed, Trump’s administration can react unilaterally and return to the negotiation table,” Andolfatto added.

Meanwhile, Bessent has called the White House approach as a negotiation tactic, describing policy changes as “strategic uncertainty.”

Testifying before the DPR Subcommittee this week, Bessent said Trump’s government had begun negotiations with 17 of the 18 top US trading partners, not including China. These countries take into account the majority of US foreign trade, Bessent said.

Trump launched a framework for a trade agreement with the British on Thursday, marked the first agreement with any country since the White House suspended several “Liberation Day” rates which were wide last month.

“Every country wants to make an agreement,” Trump said at the Oval office on Thursday, noting the future talks between Bestsent and Chinese officials.

“It will be very interesting,” Trump said.