In what looks like confirmation of comments made by Agriculture Secretary Sonny Perdue on Monday, US and Chinese negotiators are said to plan a delay for the new tariffs that are scheduled to kick in on December 15.
That’s according to officials from both sides, who apparently spoke to Dow Jones.
“US and Chinese trade negotiators are laying the groundwork for a delay of a fresh round of tariffs… as they continue to haggle over how to get Beijing to commit to massive purchases of US farm products President Trump is insisting on for a near-term deal”, the Wall Street Journal said Tuesday.
As a reminder, Trump’s “target range” for farm purchases is wholly unrealistic, assuming the $40 to $50 billion figure the administration has variously touted is supposed to represent annual buying.
On Monday, Perdue said the US is unlikely to impose more tariffs this month. Over the past several weeks, the farm buys have emerged as the key sticking point in the “Phase One” deal, which is ironic for a number of reasons, not the least of which are that 1) that was supposed to be one of the least controversial issues in the fraught negotiations, and 2) farm purchases are the centerpiece of the interim deal – without them, it’s not even clear what “Phase One” would encompass.
Last week, reports indicated that Beijing was considering new waivers to allow Chinese buyers who had bumped up against quotas to keep purchasing US farm products as a “goodwill” gesture. A Reuters story on Monday detailing new soybean buys predicated on the newly granted waivers served as confirmation.
The two sides have been wrangling over the size of the farm purchases set to be included in the interim trade pact, and there’s more than a little skepticism on the Chinese side about the feasibility of Trump’s “target range”, as shown above. China has stepped up buying over the past several months in an effort to pave the way for cordial discussions.
Read more: As Trade Talks Hang By A Thread, A Soybean Problem Emerges
The 15% tariff set for December 15 would apply to some $160 billion in Chinese goods, much of which are consumer items. In mid-August, less than two weeks after announcing new duties, Trump split the fresh escalation into two tranches in order to avoid driving up prices ahead of the holiday shopping season.
Trump is famously mercurial, so there are obviously no guarantees that he won’t pull the trigger, even as officials from both sides appear to believe that a delay is all but assured.
It’s worth noting (again) that there is no real “consensus” (per se) on what a delay without an interim deal would mean for equities and other risk assets. The prospect of Trump moving ahead with the December 15 duties always seemed unthinkable, but a postponement of that escalation without any accompanying rollback of existing levies is well within the realm of possibility.
That will be the question going forward: If there’s a delay, how much (if any) of the existing tariffs will be lifted?
And just in case people got too comfortable with the idea of a delay in the Dec 15 tariffs, Kudlow comes out this morning as says, Oh yes the Dec 15 are still on the table if Trump does like the deal.
Mercurial………..
the Kudlow stuff today was just… i mean, it comes so fast, and it’s always so contradictory that it’s almost pointless to try and keep up with it.