President Trump postpones some tariffs to December 15
August 20, 2019 Category Foreign trade, Weekly
The U.S. government has decided to delay or set aside some tariffs against China set to take effect on September 1. The United States Trade Representative (USTR) office announced that some categories were being removed from the tariffs list because of “health, safety, national security and other factors” while tariffs on other items would be delayed until December 15. Tariffs on USD155 billion of Chinese imports would be postponed, including on “cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing”, the USTR said. The USTR’s statement came after Chinese Vice Premier Liu He in a telephone conversation lodged a complaint about the U.S. decision announced on August 1 to increase tariffs on USD300 billion of Chinese imports to U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin. Donald Trump told reporters he was delaying tariffs on Chinese imports to avoid any adverse impact on U.S. shoppers before the Christmas and New Year season.
Still, U.S. stocks fell sharply on August 14 on rising worries that Trump’s move to delay some of the tariffs that were set to be imposed on China in September would not be enough to keep the escalating U.S.-China trade conflict from pushing the world into recession. U.S. Commerce Secretary Wilbur Ross said that the United States and China have not determined when to hold their next round of face-to-face trade talks. Instead, the next step in the long-running negotiations is “perhaps another phone call in a couple of weeks”.
Wang Jun, Chief Economist at Zhongyuan Bank, said postponement of tariffs was more of a gesture rather than a concession from the U.S. side. He doubted whether the decision would stand, given Washington’s flip-flop approach in trade negotiations.
China warned that if the U.S. still imposed 10% tariffs on USD130 billion of the USD300 billion of Chinese exports on September 1, it would retaliate. The warning came after Trump appeared to link the outlook for trade talks with China to a resolution of the Hong Kong protests and suggested another meeting with Chinese President Xi Jinping. Chinese diplomatic observers said the situation in Hong Kong might have given Trump fresh leverage over Beijing, but the chances of Xi agreeing to meet him remained slim. Trump called for Beijing to handle the protests in Hong Kong “humanely” and for the first time appeared to link the outlook for trade talks with China with a resolution of the Hong Kong protests. “Of course China wants to make a deal. Let them work humanely with Hong Kong first!”, Trump tweeted. Shi Yinhong, Director of the Center of American Studies at Renmin University, said: “It is absolutely impossible that Xi would meet Trump over Hong Kong. China’s fundamental position is that Hong Kong is it own internal affair, so agreeing to that would discredit its stance.”
Frank Lavin, Director of the International Trade Administration for the U.S. Department of Commerce under President George W. Bush, said Trump is “taking a step backwards, away from conflict, in the hopes that China might move”. “Is Trump really going to accept an offer or is he going to view an offer as a negotiating ploy, and just want more and more? So there has to be a way for Trump to signal that he realizes it is a good faith offer.”
Joerg Wuttke, President of the European Union Chamber of Commerce in China, said EU companies had to be realistic about the trade war and plan for an extended stand-off. “The path of least resistance is for the two sides to muddle through, avoiding the economic damage of further escalation but not making the political sacrifice to complete a final agreement,” he said. “China needs wide-ranging reforms, and the right amount of strategic pressure can help move things in that direction, but there doesn’t appear to be anything strategic about the latest tariffs,” Wuttke said. “At a time when the U.S.-China economic relationship is badly in need of thoughtful and meaningful repair, this tariff wrecking ball, which will effectively impact everything Americans buy from China, will only empower Chinese voices calling for self-reliance and disengagement,” Wuttke concluded.
A new Pew Research Center poll discovered that 60% of Americans have an unfavorable view of China – up from 47% last year – to the highest proportion since Pew started asking the question 14 years ago. The survey found that 24% of Americans regard China as America’s top threat for the future, the same percentage that said so of Russia. North Korea (12%) was the only other country to draw double-digit concern. Still, the poll finds that only 41% of Americans believe that China’s growing economy is a bad thing for the United States, compared with 50% who called it a good thing.
Meanwhile, the U.S. Department of Commerce’s Bureau of Industry and Security has added four Chinese nuclear power enterprises to its Entity List, restricting them from receiving U.S. exports. The four are China General Nuclear Power Group and its subsidiaries China General Nuclear Power Co, China Nuclear Power Technology Research Institute Co and Suzhou Nuclear Power Research Institute Co. Chinese experts said the new U.S. move is just part of its concerted efforts to hinder China’s fast-growing nuclear industry, but such attempts will be in vain. China has home-grown nuclear power technologies and is able to design and manufacture most of the components and devices domestically, while among the few imported items, very few are from the U.S.
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