2-week tariff hike delay gives US-China trade negotiators breathing room

A photo taken in 2018 showing the US flag fluttering over Chinese shipping containers at the Port of Long Beach, in Los Angeles County.
A photo taken in 2018 showing the US flag fluttering over Chinese shipping containers at the Port of Long Beach, in Los Angeles County.PHOTO: AFP

WASHINGTON - President Donald Trump announced on Wednesday (Sept 11) that he was delaying a tariff hike by two weeks “as a gesture of goodwill to China”, in a slight detente of the bruising trade war between the world’s two biggest economies.

The United States was to have raised tariffs on US$250 billion (S$344 billion) of Chinese goods from the existing 25 per cent rate to 30 per cent on Oct 1. It will now go ahead on Oct 15.

The delay was made at the request of Chinese Vice-Premier Liu He, and because the 70th anniversary of the founding of the People’s Republic of China was on the original date of the tariff hike, said Mr Trump on Twitter.

The postponement follows China’s announcement a day earlier that 16 American products will be exempted from tariffs, including anti-cancer drugs and ingredients for animal feed.

Analysts saw Beijing’s move as an attempt to ease the burden of the trade war on Chinese businesses and consumers, as well as an olive branch to Washington.

Mr Trump took the former view, paraphrasing a talk show host in his Wednesday morning response. 

He said on Twitter that China was being hit hard by the tariffs, adding: “Supply chains breaking up as many companies move, or look to move, to other countries. Much more expensive to China than originally thought.”

Later, in remarks in the Oval Office, he said the tariff exemptions were a “gesture” and added: “It was a big move. People were shocked. I wasn’t shocked. But I deal with them, and I know them and I like them. And I hope we can do something.”
 

 
 

He announced the 25 per cent to 30 per cent tariff hike on Aug 23, in response to China’s counter-tariffs on US$75 billion of imports from the US. 

He also said that another US$300 billion of Chinese imports would be subject to a new tariff of 15 per cent, up from the originally planned 10 per cent rate. 

That set of tariffs was eventually split into two tranches, the first of which went ahead on Sept 1. The second tranche is planned for Dec 15.

Talks are scheduled for early next month, but little progress has been made in recent months. 

Chinese negotiators, including Mr Liu, were originally to have travelled to Washington for talks after the tariff hike went ahead, which would have been politically embarrassing for them. 

The two-week delay means trade talks could take place ahead of the hike and potentially forestall it. 

Former acting deputy US trade representative Wendy Cutler said on Twitter that if China really wanted to send a strong signal to the US, they would have included products such as soybeans or other agricultural products in their tariff exemptions. 

“That said, I think it’s a positive step forward,” she added.

Mr Trump’s Wednesday night postponement put the ball back in China’s court. 

Ms Cutler wrote: “Your turn China!”