U.S. to Delay Some China Tariffs Until Stores Stock Up for Holiday Shoppers

Date: August 14, 2019
Source: New York Times

MEMA Industry News Editor’s Note: MEMA has called for an agreement between the U.S. and China that will allow U.S. companies to remain competitive in a global marketplace while protecting intellectual property (IP) rights. MEMA supports bilateral engagement, where China and the U.S. work together to protect the valuable IP of our members. The USTR has indicated that they intend to introduce an exclusion process for the Sept. 1 tariffs, which will be published in a future Federal Register notice. The press release from the USTR can be found here and MEMA’s most recent statement regarding tariffs on good from China can be found here.  Please contact Catherine Boland or Leigh Merino for more information.

The Trump administration on Tuesday narrowed the list of Chinese products it plans to impose new tariffs on as of Sept. 1, delaying levies on cellphones, laptop computers, toys and other goods to spare shoppers from higher prices during the back-to-school and holiday seasons. Stocks soared on the news.

The move, which pushed a new ten percent tariff on some goods until Dec. 15 and excluded others entirely, came as President Trump faces mounting pressure from businesses and consumer groups over the harm they say the continuing trade war between the United States and China is doing.

Mr. Trump’s earlier tariffs on Chinese imports were carefully crafted to hit businesses in ways that everyday Americans would mostly not notice. But his announcement this month of the ten percent tariff on $300 billion of Chinese goods meant consumers would soon feel the trade war’s sting more directly.

On Tuesday, Mr. Trump acknowledged as much.

“We’re doing this for the Christmas season,” he told reporters around noon. “Just in case some of the tariffs would have an impact on U.S. customers.”

Mr. Trump has been pressing Beijing since last year to make a trade deal that would, among other things, strengthen protections for American intellectual property, open Chinese markets to American business and result in China buying large quantities of American energy and agricultural goods.

But negotiators have made little progress since May, when progress stalled over several issues. The stumbling blocks include whether Mr. Trump would roll back the 25 percent tariffs the administration has already imposed on roughly $250 billion of Chinese goods and whether Beijing would enshrine in law the reforms it has pledged to make.

The president’s comments on Tuesday about the tariffs’ impact on consumers followed an announcement by United States trade representative’s office that while the new tariffs would take effect as Mr. Trump had threatened, some notable items would not immediately be subject to them.

Consumer electronics, video game consoles, some toys, computer monitors and some footwear and clothing items were among the items the trade representative’s office said would not be hit with tariffs until retailers had time to stockpile what they needed for their busiest time of year.

The administration also said some products were being removed from the tariff list altogether “based on health, safety, national security and other factors.” A spokesman for the trade representative’s office said the products being excluded from the tariffs included car seats, shipping containers, cranes, certain fish and Bibles and other religious literature.

The S&P 500 climbed nearly two percent after the announcement, lifted partly by stocks of retailers and computer chip producers that have been sensitive to indications that trade tensions were getting either better or worse.

Best Buy, which gets many of the products it sells from China, was among the best-performing stocks in the S&P 500, up more than eight percent in morning trading. The Nasdaq composite index rose more than two percent.

Liu He, China’s vice premier and the country’s lead trade negotiator, spoke with Robert Lighthizer, the United States trade representative, and Steven Mnuchin, the Treasury secretary, on Tuesday, and the three agreed to speak again in two weeks, the state-run Xinhua News Agency reported.

Earlier Tuesday, Mr. Trump had criticized China for not making large purchases of American farm goods, suggesting that the tariffs might force them into action.

“As usual, China said they were going to be buying ‘big’ from our great American Farmers,” he wrote. “So far they have not done what they said. Maybe this will be different!”

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