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Trump Threatens Higher Tariffs if No China Deal

Thursday, November 14, 2019
Sandler, Travis & Rosenberg Trade Report

President Trump said Nov. 12 that if the U.S. and China are unable to finalize the “phase one” trade agreement they are currently negotiating he will “substantially raise” existing import tariffs on Chinese goods. He also warned of similar measures against “other countries that mistreat us.”

In mid-October Trump postponed a planned increase in the Section 301 additional tariff on $250 billion worth of Chinese goods from 25 percent to 30 percent after announcing an agreement in principle on the first phase of a broader trade deal with China. Both sides have reported progress in recent weeks toward finalizing that agreement, and both U.S. and Chinese officials said recently that the U.S. had agreed to roll back some of its existing tariffs as part of a phase one deal.

Trump subsequently downplayed those reports, saying “I haven’t agreed to anything” but suggesting that “somewhat of a rollback” could be on the table. According to a Reuters article, White House economic adviser Larry Kudlow gave further credence to that idea when he “told CNBC that the phase one agreement could include some adjustments to tariffs already in place.”

In a Nov. 12 speech to the Economic Club of New York, Trump said a “significant phase one trade deal with China … could happen soon.” But he also sought to increase pressure on China by holding out the threat of more tariffs. “If we don’t make a deal, we’re going to substantially raise” tariffs on List 1, 2, and 3 goods, he said. A Chinese government-controlled media outlet responded that “if there’s no rollback of tariffs, there will be no phase 1 deal.”

Trump also used the speech to threaten a substantial tariff increase on “other countries that mistreat us.” While he did not name specific potential targets, elsewhere in his speech he called out the European Union for trade barriers he called “terrible” and “in many ways, worse than China.” However, he also suggested that a potential tariff increase would be imposed through the United States Reciprocal Trade Act, a bill introduced earlier this year that he said would likely only pass Congress if Republicans regain control of the House in the 2020 elections.

For more information on the U.S. tariffs on China and negotiations on a bilateral trade agreement, please contact trade consultant Nicole Bivens Collinson at (202) 730-4956.

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