Tariffs scheduled to increase from 25% to 30% on $250 billion worth of goods exported from China into the United States on October 15 could be postponed or cancelled depending on progress made in trade talks this week between the two countries, according to the U.S Chamber of Commerce.
Optimism from the nation’s most powerful business lobbying group was elevated after President Trump announced on October 10 that he would meet with China’s Vice Premier Liu He on October 11. Liu is in Washington, D.C. for scheduled meetings with U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin.
“This week has been on trying to find a path toward a bigger U.S.-China trade deal by making progress on market access, intellectual property protection, and other critical areas,” said Myron Brilliant, the chamber’s Executive Vice President and Head of International Affairs, in a media briefing on October 10.
“I think there’s even a possibility of a currency agreement this week, which could lead to a decision by the U.S. not to put forward the tariff rate hike on October 15. We’re hopeful that will come out of the meetings this week.”
Brilliant, who said he met with Liu earlier in the week, said the two sides could even go further by removing plans to impose an additional 15% tariff on $300 billion worth of Chinese imports on December 15, “as well as maybe even rolling back [an initial 15%] tariff put in place” on September 1, Brilliant said. “But that’s going to depend on what additional offers the Chinese make. That’s the aspirations we have, whether they get there or not we’ll see.”
Bloomberg reported that as part of the negotiations, China planned to ask the U.S. to lift sanctions imposed two weeks ago on tanker vessels owned by subsidiaries of China’s COSCO Shipping. The U.S. accused the companies of violating restrictions on carrying Iranian oil. The sanctions caused a bidding war among charterers seeking replacement vessels, according to Bloomberg, causing tanker rates in the Middle East-China route to surge.
Tariffs have been a hot-button issue as well for the American Trucking Associations (ATA). ATA president Chris Spear recently called a “blunt instrument” approach causing pain for the industry, particular tariffs on steel and aluminum.
To avoid the U.S. tariffs, many producers are moving production out of China. But instead of shifting manufacturing to the U.S. – a result contemplated by the Trump Administration – many are instead opting for low-cost options elsewhere in Asia to maintain profit levels.
Complicating this week’s talks is the move on October 7 by the U.S. Commerce Department to add 28 Chinese governmental and commercial organizations to the Entity List identified by the U.S. to be involved in human rights violations.
“The timing is unfortunate, because it does bleed into already-complicated” trade talks, Brilliant said at the briefing. “We know that issues around human rights and national security add a complex dimension in the overall relationship, but we’ve got to have the trade talks proceed on their own merits because there’s so much at stake.”