U.S. & China: Temporary Tariff Truce
While there is still a lot of uncertainty with regards to the U.S.-China Trade War, there is positive news coming out of the recent G20 summit meeting in Buenos Aires. For now, the G20 meeting between President Trump & President Xi Jinping of China concluded with a temporary 90-day tariff truce. The U.S. has agreed to delay the tariff increase on List 3 of Section 301 Tariffs in exchange for China agreeing to increase purchases from the U.S. in an effort to reduce the trade imbalance between the two countries.
What this means for U.S. importers is that on Jan 1, 2019, the duties on Section 301’s List 3 ($200 billion worth of product) will stay at the current 10% rate and will not increase to 25% as previously announced. This also means that a possible “List 4,” is off the table for now. List 4 would include everything else not covered yet, including footwear, apparel, and consumer electronics.
Negotiations are to begin immediately and both sides have 90 days to reach an agreement. If the parties are unable to reach an agreement in that timeframe, the 10% tariffs will be raised to 25%.
While this is a welcome reprieve from the previously escalating trade war between the U.S. and China, it is still unclear what will happen with the negotiations, including whether an agreement will be reached or if the ceasefire will be extended if they aren’t concluded within the 90 day timeframe.