The latest plot twist in the Sino-US trade soap opera came on Wednesday evening when Donald Trump announced he’ll delay the planned tariff hike on $250 billion in Chinese goods for two weeks.
“At the request of the Vice Premier of China, Liu He, and due to the fact that the People’s Republic of China will be celebrating their 70th Anniversary on October 1st, we have agreed to move the increased Tariffs on 250 Billion Dollars worth of goods (25% to 30%), from October 1st to October 15th”, Trump said, in a tweet.
Notwithstanding that “agreed” probably isn’t the best word choice there, the development is the latest bit of incrementally positive news. Over the past several days, multiple reports indicated China is prepared to make “modest purchases” of US farm products in exchange for a tariff delay and a lifting of some export restrictions for Huawei. Now we have that delay.
SCMP said Tuesday that the working-level talks ahead of next month’s principal-level discussions are centered around revisiting the 100-page draft agreement that both sides were working from prior to May, when talks fell apart. That text will apparently be at the center of the October pow wow.
More broadly, the delay paves the way for Bob Lighthizer and Steve Mnuchin to have a constructive dialogue with Liu when he arrives in Washington early next month.
The tariff hike in question was part of Trump’s response to China’s retaliatory measures announced on August 23. That morning, Beijing unveiled plans to hit $75 billion in US goods with duties following Trump’s August 1 escalation.
After the closing bell on Wall Street that day, Trump said the US would hike the tariff rate on the $300 billion in Chinese goods taxed from September 1 and December 15 to 15% from 10% and on the $250 billion in goods that were taxed at 10% from September 24, 2018, and at 25% from July, to 30% on October 1. And yes, that’s all just as convoluted and absurd as it sounds. Here’s an updated visual:
Earlier Wednesday, China announced tariff exemptions on a list covering 16 categories of products, effective for three years from September 17. That was seen as something of a goodwill gesture, although Trump attempted to frame it as a sign of weakness.