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No Plans to Delay China Tariff Increase as Talks Continue

Tuesday, February 05, 2019
Sandler, Travis & Rosenberg Trade Report

After recent talks between U.S. and Chinese officials, President Trump said he currently has no plans to push back an increase in tariffs on imports from China. Unless the two sides reach an agreement on issues such as forced technology transfer, intellectual property protection, non-tariff barriers, and cyber theft, the U.S. is expected to increase from 10 percent to 25 percent its additional tariff on $200 billion worth of goods from China. (Click here for more details on these and other developments in the U.S. Section 301 case against China.)

According to a White House press release, high-ranking officials from the U.S. and China discussed a wide range of issues Jan. 30-31 in Washington, including (1) the ways in which U.S. companies are pressured to transfer technology to Chinese companies, (2) the need for stronger protection and enforcement of intellectual property rights in China, (3) the tariff and non-tariff barriers faced by U.S. companies in China, (4) the harm resulting from China’s cyber-theft of U.S. commercial property, (5) how market-distorting forces, including subsidies and state-owned enterprises, can lead to excess capacity, (6) the need to remove market barriers and tariffs that limit U.S. sales of manufactured goods, services, and agriculture to China, (7) the role of currencies in the bilateral trading relationship, and (8) the need to reduce the growing trade deficit the U.S. has with China.

The U.S. is particularly focused on reaching meaningful commitments on structural issues and deficit reduction, the press release states, and both parties have agreed that any resolution will be fully enforceable.

U.S. Trade Representative Robert Lighthizer said the recent talks were “very intense” but “made progress.” However, he also said there are “a lot more issues to cover,” raising the question of whether the scheduled tariff increase might be delayed to allow more time to reach an agreement. The White House said March 1 is still “a hard deadline” but in comments to the press Trump was less definitive, stating that “I don’t think we have to extend” but acknowledging that the negotiations are “very complex.” The next round of talks is scheduled for mid-February when Lighthizer and Treasury Secretary Steve Mnuchin travel to China.

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