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Threatened Tariff Hike on Chinese Imports Officially Postponed While Trade Talks Ongoing

Posted December 21, 2018

The Trump administration this week officially postponed a threatened increase of tariffs on Chinese imports for the duration of time while the two sides are engaged in talks aimed at easing trade tensions and resolving a wide range of contentious issues.

In a notice published in the Federal Register this week, the U.S. Trade Representative advised that it had modified its Section 301 investigation by postponing the date on which tariffs were set to increase on $200 billion worth of Chinese goods from January 1, 2019 to March 2, 2019 (the day following the end of the 90-day negotiation period).

The Section 301 tariffs had been set to increase from 10% to 25% on January 1 before an agreement was reached between U.S. and Chinese delegations during a December 1 meeting to hold off imposing additional tariffs for 90 days while the two sides remain engaged in trade negotiations.

The USTR’s statement notes that the president “agreed that on January 1, 2019, he will leave the tariffs on $200 billion worth of product at the 10% rate, and not raise it to 25% at this time...” It also indicates that “Both parties agree that they will endeavour to have this transaction completed within the next 90 days. If at the end of this period of time, the parties are unable to reach an agreement, the 10% tariffs will be raised to 25%.” The end of the 90-day period mentioned in the December 1 Statement is March 1, 2019.

On Thursday, following detailed discussions about the issues to be tackled in the negotiations, Chinese officials announced that the two sides intend to hold more talks in January. Commerce Ministry spokesman Gao Feng expressed confidence in a “successful implementation” of the truce reached at the beginning of December in talks between President Trump and his Chinese counterpart, Xi Jinping, on the sidelines of the G-20 summit in Buenos Aires.

Gao said the two sides had been in close contact since then, including a vice-ministerial level call on Wednesday, when they went over arrangements for more talks including the issues of trade balances and the protection of intellectual property rights. “The two sides will arrange consultations including meetings and calls at any time as needed to promote the implementation of the consensus of the heads of state,” Gao told reporters in Beijing.

Meanwhile, U.S. Treasury Secretary Steven Mnuchin has indicated that China and the United States are planning to hold meetings in January to “document an agreement” on trade. “We’re in the process of confirming the logistics of several meetings and we’re determined to make sure that we use the time wisely, to try to resolve this,” the Treasury chief said.

Mnuchin confirmed that reducing the U.S. trade deficit with China was still a major priority for Trump but cautioned that this would take time, noting in this regard that the administration was also focused on helping to rebalance trade by pushing for meaningful structural changes in China’s economy.