U.S. and China Tariff Hikes are Yikes

After months of speculation and debates, the negotiations between two powerhouse countries, the U.S. and China, seem to be heading towards a deal. The road to a deal has not been an easy one for either economies.  At the beginning of 2018, the Trump administration initiated the tariff battle by placing $250 billion on Chinese imports. China fired back with a $110 billion on the U.S. thus beginning the trade war.

While there has been some positive progress, there are still numerous uncertainties.

Before Thursday’s meeting, President Trump stated, “And I would think [within] the next four weeks or maybe less, maybe more, whatever it takes, something very monumental could be announced.”

While this does seem reassuring, a deal does not have to automatically take away the tariffs. President Trump has been very vocal about the fact that he would like to keep the duties in place until he is sure China will be fully compliant with all negotiated items. Considering these statements, it is very likely that China will do the same.

After the latest meeting between China and the U.S. on Friday April 5th, President Trump called the meeting a “big success.” That being said, while it does seem that both countries would like to reach a deal, President Trump’s statements have been inconsistent with the administration’s backing away from the 4 week timeline for the negotiation completion that it had previously predicted.

For the trade community, a very important piece to watch out for as negotiations continue, are changes on the product exclusion approvals for List 1. These exclusions include high tech products such as LED displays, as well as products in chapters 84, 85, and 90. The foregoing chapters include engines and different types of housings. Additionally, businesses should be aware of the potential for increased bond costs. These bond costs will stick around a while after a trade deal is in place. Positively, once the trade agreements are in place, China should commit to buying more U.S. commodities as well as 100% foreign ownership for U.S. companies operating within the country.

President Trumps’ top economic advisor, Larry Kudlow, states that this week will be filled with numerous phone calls between the countries’ top officials.

With the rapid updates on the U.S. and China trade negotiations, make sure to stay updated by subscribing to the Allyn Global Trade Compliance newsletter in order to receive future updates. If you would like any additional information on how the U.S. China tariffs could affect your business, or have any questions, please contact Allyn at (239) 489-9900 or you can email us at sales@allynintl.com.

Contributor: Adam Svoboda

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