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U.S. to Delay Tariff Hike During Trade Talks with China

Tuesday, December 04, 2018
Sandler, Travis & Rosenberg Trade Report

President Trump has agreed to delay a tariff increase on $200 billion worth of imports from China while the two sides conduct negotiations on longstanding trade irritants. In addition, Beijing has agreed to increase purchases from the U.S. in an effort to reduce its bilateral trade surplus.

An increase in the Section 301 additional tariff imposed on Chinese goods from 10 percent to 25 percent had been scheduled to take effect Jan. 1, 2019. (Click here for more details on this and other developments in the U.S. Section 301 case against China.) However, a White House statement said this increase will not take effect “at this time” and that the two countries “have agreed to immediately begin negotiations on structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture.”

The statement indicates that both sides “will endeavor to have this transaction completed within 90 days.” If no agreement is reached within that time, the 10 percent additional tariff will be increased to 25 percent (although the statement does not say whether such an increase would be immediate).

While a Xinhua article cited Chinese Foreign Minister Wang Yi as saying the U.S. and China “also agreed to step up negotiations toward the elimination of all additional tariffs” (presumably those affecting $250 billion in U.S. imports from China as well as more than $100 billion in Chinese imports from the U.S.), at press time the White House had offered no confirmation.

In addition, the White House statement said, China has agreed to purchase an as-yet-unspecified “but very substantial” amount of agricultural, energy, industrial, and other product from the U.S. to reduce the trade imbalance between the two countries. Agricultural purchases are set to begin immediately, which should benefit U.S. farmers that have seen export shipments decline in recent months amid trade tensions with China and other major trading partners.

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