Charles Esther
Billionaire hedge fund manager Bill Ackman believes that the United States and China should drastically reduce their tariffs on each other.
He argues that the only reason they have not done so is a fear of “looking weak” in the eyes of the public.
Ackman, who heads Pershing Square Capital, stated that the tariffs between the two countries should be brought down to more “reasonable levels,” specifically between 10% to 20%.
Current Tariff Situation Between the US and China
As it stands, imported Chinese goods entering the United States are subject to a 145% tariff, while American goods entering China face a 125% tariff.
In addition to these, a baseline tariff of 10% remains on all imports into the United States.
Although former President Donald Trump paused country-specific tariffs earlier this month, the trade landscape remains tense.
The Short-Term Damage of Tariffs
Ackman expressed concern about the short-term effects of these tariffs.
He pointed out that companies dependent on China for a significant portion of their goods are currently facing damaging impacts due to the tariffs.
In a recent post on X, Ackman shared his belief that the US and China should act quickly to reduce tariffs to more reasonable levels of 10% to 20%.
He argued that such a move would benefit both countries by fostering better trade relations and economic stability.
The Fear of Appearing Weak
According to Ackman, the primary factor preventing both nations from reducing tariffs is the fear of appearing weak.
He emphasized that it is not a sign of weakness for both countries to pause or reduce their tariffs.
On the contrary, he suggested that it would make sense for both countries to take down their tariffs in a show of mutual cooperation.
The Long-Term Impact of Tariffs
Ackman also raised an important point regarding the future of global trade.
He questioned the belief that China could “win” a trade war with the United States.
He explained that as tariffs persist, companies with supply chains in China will increasingly relocate their operations to other countries such as India, Vietnam, Mexico, and even the United States.
This trend, he argued, is already in motion and cannot be reversed.
For Ackman, this means China needs to understand that the longer the tariffs remain, the more rapidly businesses will exit China.
The Future of US-China Trade Talks
As for the status of ongoing trade negotiations, there has been conflicting information in recent days.
President Trump claimed in an interview with “Time” magazine that the US and China were still in talks.
However, two Chinese officials stated that no talks were currently taking place, adding to the confusion about the future of the trade relationship.
Conclusion
In conclusion, Bill Ackman believes that the US and China must reduce tariffs for the long-term health of global trade.
He asserts that the only obstacle to such a move is the fear of appearing weak, a mindset that both nations should overcome.
As the situation continues to evolve, the long-term implications of ongoing tariffs will become clearer, but Ackman’s comments highlight the urgent need for a more rational and cooperative approach.
