By Randy Gordon, President and CEO
President Trump at 12:01 a.m. on May 10 proceeded to increase tariffs on $200 billion worth of Chinese imports to the United States as the two countries’ trade negotiators convened for a second day of talks this morning in an effort to resolve the impasse.
Trump’s decision to proceed with the additional tariffs followed a day of talks between delegations led by U.S. Trade Representative (USTR) Robert Lighthizer and Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He – talks that, prior to last weekend, had been anticipated to result in a preliminary agreement. The latest dust-up occurred following last week’s meeting in China, when U.S. negotiators said the Chinese proposed to walk back several previously agreed-upon provisions for structural reform of its economic system. USTR officials said the Chinese had presented a new draft of the agreement with major substantive revisions to significant provisions, causing U.S. officials to assert that China was reneging on its previous commitments. It was intimated that Chinese officials determined that many of the concessions they were being asked to make conflicted with existing Chinese laws, which the Chinese government was not prepared to change.
The latest U.S. tariff increases – escalating to 25 percent from the previous 10 percent – apply to Chinese imports imposed effective Sept. 24, 2018 following the completion of a Section 301 USTR investigation on China’s trade practices. That original USTR notice stated that U.S. tariffs on the $200 billion worth of Chinese imports would increase to 25 percent effective Jan. 1, 2019. But that increase subsequently was postponed on two occasions, the most recent of which was on March 5, 2019, in deference to the ongoing trade negotiations between the two countries.
USTR’s latest announcement, issued May 9, stated that the increase in tariffs to 25 percent is being implemented at the president’s direction “in light of the lack of progress in discussions with China,” given that “China has chosen to retreat from specific commitments agreed to in earlier rounds (of trade talks.)” China has said it is prepared to retaliate with unspecified “countermeasures.”
Trump further said he is “starting the paperwork” to also impose 25 percent tariffs on the $325 billion worth of U.S. imports from China not already subject to tariffs. In a tweet this morning, Trump said, “…The process has begun to place additional tariffs at 25 percent on the remaining $325 billion (worth of Chinese products exported to the United States). The U.S. only sells China approximately $100 billion of goods and products, a very big imbalance.”
Trump’s tweet also inferred that the U.S. government could purchase up to $100 billion in agricultural products “from our Great Farmers, in larger amounts than China ever did, and ship it to poor and starving countries in the form of humanitarian assistance. In the meantime, we will continue to negotiate with China in the hopes that they do not again try to redo the deal!”
Monitor the NGFA’s website for future developments.