[By Guancha Observer Network, Zhang Jingjuan] As the US and China are set to significantly delay imposing additional tariffs on each other's goods, The Wall Street Journal published an editorial titled "Trump Tariffs Retreat" on May 12, bluntly stating that President Trump's trade war has failed and the agreement reached with China is more like a surrender by Trump.

The article notes that few economic policies have been as thoroughly and rapidly disavowed as Trump's "Liberation Day" tariffs, and it was Trump himself who shattered them. On the morning of May 12 local time, Trump agreed to cut tariffs on Chinese goods, marking his second major concession within a week.

The article states that investors cheered this decision. According to calculations by Daniel Clifton, partner and policy research director at New York-based Strategas Research, Trump's tariff rollback collectively releases approximately $300 billion (approximately RMB 2157.3 billion) in tariff relief, which can be considered a large-scale tax cut.

For major trading partners, the adjusted tariffs remain high, but the 90-day moratorium spared both sides from what appeared to be an impending economic collapse. American consumers face shortages of items, while China worries about rising unemployment rates.

"Like the trade agreement reached last week with the UK, the deal with China seems more like Trump's surrender than a victory," the article states. Aside from the tariff rollback, neither side made broader concessions on substantive trade issues affecting Sino-US relations.

The article emphasizes that Trump's self-inflicted damage has weakened the possibility of forming an anti-China mercantilist international coalition. By imposing tariffs on allies, he personally destroyed America's economic credibility and political reputation. China has also demonstrated that economic sanctions against China will not work.

On May 12, 2025, Geneva, Switzerland, US Treasury Secretary Bessent and Trade Representative Griner held a press conference after the high-level Sino-US economic and trade talks. IC Photo

Currently, Trump has implemented protectionism for nearly four months. Changes made since he announced the tariffs include: significantly expanding the range of exemptions for new tariff measures on Canada and Mexico; suspending the implementation of so-called "reciprocal tariffs" for all countries except China for 90 days; exempting some electronic products from "reciprocal tariffs"; reaching a trade agreement with the UK; and reducing tariffs on Chinese goods within 90 days.

The article suggests that in the future, Trump may retain a benchmark tariff of 10% globally and impose tariffs on China below 145%. During the suspension of "reciprocal tariffs," negotiations with dozens of countries may secure marginal market access for American businesses. However, so far, there is no indication that any substantial trade agreements promised by Trump have been reached.

After weeks of market turmoil, the economy still faces higher trade costs and uncertainty, but at least avoids a "Smoot-Hawley Tariff Act 2.0" disaster. Investors, businesses, and families may welcome this outcome, as it is much more moderate than Trump's initial plans.

The Smoot-Hawley Tariff Act is considered by later generations as the "most foolish bill." Around 1930, the US stock market was volatile, and financial crises swept the country. To protect domestic farmers and businesses from foreign competition, then-President Hoover signed this act. This act continued the previous high tariff policy, raising import taxes to nearly 60%, and greatly expanded the scope of taxable goods to cover approximately 20,000 types of products. Despite strong opposition from both inside and outside the US before its enactment, it failed to sway President Hoover's decision. In June 1930, the bill was signed into law.

The article points out that a comprehensive tariff of 10% is still four times the average rate before Trump took office, and companies protected by high tariffs will gradually lose their global competitiveness.

If there is any silver lining to this turmoil, it is that the market forced Trump to wake up from his fervor for the "golden age of high tariffs." This era did not last two months, and it was less of a "golden age" and more of a "lead age." Peter Navarro, Trump's senior advisor on trade and manufacturing and a trade skeptic, is considered the architect of Trump's tariffs, but he did not attend the latest high-level Sino-US economic and trade talks.

The article concludes that although Trump may be unwilling to admit it, his trade war has already collapsed, defeated by Adam Smith's (proponent of free trade) economic theory. He is not the first US president to learn this lesson.

This article is an exclusive contribution from the Observer Network and cannot be reprinted without permission.

Original source: https://www.toutiao.com/article/7503841768199242255/

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