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US shelves planned China tariff rise ‘until further notice’

US shelves planned China tariff rise ‘until further notice’

US trade officials today confirmed that the US will suspend “until further notice” its threatened increase in tariffs on $200 billion of Chinese imports, a delay that President Donald Trump had unofficially suggested last weekend, thanks to apparent progress by the world’s two largest economies towards a trade deal.

The Office of the US Trade Representative (USTR) today confirmed to Lloyd’s Loading Listthat it will file documents this week under the direction of President Trump to “suspend the scheduled tariff increase until further notice”, noting: “On February 24, President Trump announced that a tariff increase on certain Chinese imports that had been scheduled for March 1 is being delayed while trade negotiations between the United States and China continue to make substantial progress.  In accordance with the President’s direction, the Office of the United States Trade Representative will publish a notice in the Federal Register this week to suspend the scheduled tariff increase until further notice.”

The US import tariffs on thousands of categories of Chinese goods had been set to rise from 10% to 25% on Saturday, a deadline set by Trump in early December after he and Chinese leader Xi Jin Ping agreed to a truce in the trade war between the two countries.

Uncertainty about the trade relationship between the two has unsettled financial markets and companies around the world and contributed to a flat-lining of world trade in the fourth quarter of 2018 and led to distortions and uncertainty within freight transport markets for much of last year, including significant front-loading in order to beat tariff deadlines.

Trump had indicated on Sunday that he would delay the tariff increase, but had not given details nor a timeframe. And apparent disagreements between Trump and his top trade envoy, US Trade Representative Robert Lighthizer, had added to uncertainty about the stability of any agreement either within the US and between US and Chinese negotiators.

Although Trump had declared Monday that he would hold a “signing summit” with Chinese President Xi for the deal that Lighthizer is trying to negotiate, indicating an eagerness to reach some kind of agreement, Lighthizer has stuck a more cautious tone about the negotiations with Beijing, sources including CNN and Bloomberg have reported.

Lighthizer said that the talks between the two countries were making real progress, but stressed that much work remained. Lighthizer said it was still unclear whether the Chinese will meet US demands — and that the issues were too serious to simply accept Chinese promises to purchase more US agricultural products and call it a win.

Bloomberg reported that Lighthizer, who it said has spent years arguing for a tougher trade stand against China and was one of the chief architects of the policy that led to Trump imposing tariffs on some $250 billion in imports from China, fears that Trump has become too eager to close what he has pre-emptively billed as an historic deal with China. It reported that other “China hawks” in the US administration and in Congress worry that, having built up considerable leverage through his tariffs, Trump has become too focused on cutting a deal to calm financial markets, and that any agreement may fail to address core issues such as intellectual property theft. The concern is that a deal could end up seeing only a short-term increase in Chinese purchases of US agricultural and energy products.

After Agriculture Secretary Sonny Perdue said China had offered to buy 10 million tons of soybeans, Republican Senator Marco Rubio of Florida on Friday tweeted: “No matter how many tons of soybeans they buy, if China gets to keep cheating and stealing trade secrets it won’t be a good deal for America, our workers or our national security.’’

That view was reportedly echoed by Lighthizer, who commented: “Don’t go for the soybean solution. This is our one chance.”

Nevertheless, some shippers have already welcomed the US-China tariff delay.

The US National Retail Federation commented: “We welcome the progress made between the US and China and commend the administration for its efforts to address unfair trading practices. The decision to avoid a tariff hike is a positive development, and we encourage the administration to build on this momentum and reach a resolution that will eliminate uncertainty for American businesses and consumers.

“We look forward to continued progress and an agreement that will end tariffs and achieve a more fair and balanced trading relationship.”  

NRF cited data released by Tariffs Hurt the Heartland – a campaign backed by NRF – indicating that recent tariffs imposed by the administration had cost US businesses $2.7 billion in November 2018 alone. Tariffs Hurt the Heartland also released a report prepared by Trade Partnership that found American workers would lose nearly one million US jobs if tariffs on $200 billion of Chinese imports increased from 10% to 25%.

 

04/03/2019

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