Trade talks with China may be sped up if the U.S. decides to postpone additional planned tariffs.
China announced on Dec. 6 that it would exempt some U.S. soybeans and from tariffs in an attempt to add momentum to trade talks, according to Hong Kong-based outlet South China Morning Post. China imposed tariffs of 25 percent on U.S. soybeans and in July 2018, and an additional 5 percent on soybeans and 10 percent on this September in retaliation to U.S. tariffs.
“The goal [of this move] is to expand purchases and reassure the United States,” a Chinese source told CNBC.
Top economic and trade advisers in the Trump administration were expected to meet after WLJ press time to lay the groundwork for a delay in the latest round of tariffs against Chinese goods.
The tariffs were scheduled to go into effect Dec. 15, according to a report by Reuters. The tariffs—15 percent on $160 billion worth of Chinese exports—would affect consumer goods such as cell phones, laptop computers, video games, clothing, and footwear. Tariffs were originally supposed to go in effect Sept. 1, but the deadline was pushed back for the Christmas season and, “just in case some of the tariffs would have an impact on U.S. customers,” according to President Donald Trump.
A source told Reuters if the tariffs were allowed to take effect as planned, then U.S.-China trade deal talks are likely done for the remainder of Trump’s term.
“Either way we’re going to be in a great place… The president loves [the tariffs],” Peter Navarro, assistant to the president and director of trade and manufacturing policy, told Fox Business Network during an interview Dec. 10. Navarro said, “If we get a great deal, we’ll be in a good place as well,” but ultimately, the decision to remove the tariffs is up to the president.
The Office of the U.S. Trade Representative must issue a modification for the tariffs, or they will automatically go into effect on Dec. 15. Larry Kudlow, director of the White House’s National Economic Council, said no decision had been made yet as of Dec. 10.
“The reality is those tariffs are still on the table, the Dec. 15 tariffs, and the president has indicated if the short strokes remaining in negotiations do not pan out to his liking, that those tariffs could go back into place,” Kudlow said at a Wall Street Journal conference.
It is likely in China’s best interest to refuse a trade deal if tariffs are not reduced. Trump has alluded to postponing a trade deal with China, saying at the recent NATO summit earlier this month, “In some ways, I like the idea of waiting until after the election for the China deal, but they want to make a deal now and we will see whether or not the deal is going to be right.”
Kenny Polcari, a senior marketing strategist at Slatestone Wealth, told CNBC there was likely going to be an “eleventh hour” announcement on Dec. 14 announcing a deal in progress.
“They’re going to come out and say ‘we’ve got a deal … we’re working on tweaking, fine-tuning it. But, to show good faith, we’re not going to impose these tariffs.’ And then the markets will rally.” — WLJ
