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Signs of hope in trade war as US delays new tariffs on China

Tuesday August 13 2019

Trump and Xi

US President Donald Trump and China's President Xi Jinping attend a bilateral meeting on the sidelines of the G20 Summit in Osaka on June 29, 2019. PHOTO | BRENDAN SMIALOWSKI | AFP 

RICHARD MUNGUTI
By RICHARD MUNGUTI
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WASHINGTON,

US retailers and global financial markets got an early Christmas present Tuesday as President Donald Trump's administration announced it is delaying tariffs on key consumer electronic goods imported from China.

And news that top US and Chinese trade officials spoke by telephone early Tuesday offered further signs of a possible letup in the trade war that had been escalating in recent weeks.

The news sent global stock markets surging higher, relieved there might be an agreement that would forestall the feared hit to the world economy, which already has been showing signs of strain.

The latest round of tariffs on $300 billion in Chinese goods, which Trump announced on August 1, are due to take effect on September 1, mean all Chinese imports into the United States would be subject to additional duties.

The announcement prompted immediate outcry from retailers as they prepare for the holiday shopping season.

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PRODUCTS AFFECTED

But the office of the US Trade Representative (USTR) announced it is delaying until December 15 imposition of new 10 percent tariffs on Chinese electronics.

USTR said in a statement it was going ahead with the tariffs next month, but would delay the start for cell phones, laptops, computer monitors, video game consoles and some toys, footwear and clothing.

The list includes an odd assortment of products, including baby furniture, diapers and men's suits, as well as frozen fish, cigar holders, sugar beets, pesticides, bedding and school supplies.

In addition, USTR said "certain products are being removed from the tariff list based on health, safety, national security and other factors and will not face additional tariffs of 10 percent."

That list includes car seats, shipping containers, cranes for ports and bibles.

DOUBT

US Trade Representative Robert Lighthizer spoke with Chinese Vice Premier Liu He early Tuesday and has another call planned in two weeks, a USTR official told AFP.

Treasury Secretary Steven Mnuchin also participated, officials said.

The sides were due to hold another round of meetings in Washington in September, but the deterioration in relations in the past two weeks cast doubt on whether the negotiations would take place.

Trump accused Beijing of continuing to renege on its commitment to buy US agricultural goods.

"As usual, China said they were going to be buying 'big' from our great American Farmers. So far they have not done what they said. Maybe this will be different!" Trump tweeted on Tuesday.

HARDLINE TACTICS

Trump has continued to publicly pursue hardline tactics against China, repeatedly excoriating Beijing for backing out of conditions he says were agreed, and manipulating its currency to gain a trade advantage over American firms.

He has justified the harsh measures saying US consumers are not being affected by the higher tariffs, despite complaints from industry and retailers about rising costs.

Economists say the impact is showing up in data, including in consumer inflation.

Ian Shepherdson of Pantheon Macroeconomics said the Consumer Price index shows accelerating prices for things like furniture and flooring, which "are tariff effects, and offer a taste of what would happen if the administration imposes tariffs on a wide range of imported Chinese consumer goods next month."

The US is demanding China make changes to reduce the US trade deficit, including opening its economy to more foreign products and foreign companies, reducing subsidies and stop the theft of American technology.

US and Chinese negotiators met in Shanghai in late July for the first time since talks collapsed in May, but only Friday Trump cast doubt on the meetings set for September, and said Washington was "not ready to make a deal."