US delays new 10% China import tariffs on key consumer goods

New duties delayed to 15 December for articles where China supplies more than 75% of total US imports, including cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing.

The Trump administration has agreed to delay planned new 10% tariffs until 15 December on certain consumer product imports from China in which China supplies more than 75% of total US imports, following feedback from US businesses and renewed talks with Chinese trade negotiators. However, the new 10% import duties on around half of the $300 billion of Chinese import products are still scheduled to take effect on 1 September.

The United States Trade Representative (USTR) yesterday announced “the next steps in the process of imposing an additional tariff of 10% on approximately $300 billion of Chinese imports”, noting that “certain products are being removed from the tariff list based on health, safety, national security and other factors and will not face additional tariffs of 10%”.

It added: “Further, as part of USTR’s public comment and hearing process, it was determined that the tariff should be delayed to December 15 for certain articles. Products in this group include, for example, cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing.”

USTR said it intends to conduct an exclusion process for products subject to the additional tariff, and “will publish in the Federal Register as soon as possible additional details and lists of the tariff lines affected by this announcement”.

US business and trade organisations generally welcomed the move.

David French, Senior Vice President for Government Relations at the National Retail Federation, commented: “While we are still reviewing the details, we are pleased the administration is delaying some tariffs ahead of the holiday season and acknowledging the impact on American consumers. Still, uncertainty for US businesses continues, and tariffs taking effect September 1 will result in higher costs for American families and slow the US economy.

“During this delay period, we urge the administration to develop an effective strategy to address China’s unfair trade practices by working with our allies instead of using unilateral tariffs that cost American jobs and hurt consumers.”

A trade group representative told Reuters that USTR had informed them that it opted to delay tariffs on items where China supplies more than 75% of total US imports, while product categories where China supplies less than 75% will still face tariffs on 1 September.

According to US Census data, China supplied 82% of US cell phones and 94.5 percent of US laptops in 2018, Reuters noted.

Based on a Reuters analysis, the delay could extend to around half of the $300 billion list of remaining Chinese imports. Chinese imports subject to the tariffs on 15 December totalled about $156 billion last year, according US Census bureau data.

While most retailers would have stocked their holiday merchandise before the September deadline, some might have faced the tariffs for fill-in orders late in the holiday shopping season, it highlighted.

Trump’s tariff delay comes amid growing concerns about a global economic slowdown. Goldman Sachs said on Sunday that fears of the US-China trade war leading to a recession were increasing and Goldman no longer expects a trade deal between the two countries before the 2020 US presidential election.

New figures from China indicate that its economy has slowed to its lowest growth rate in nearly two decades. Reuters noted that China’s economy “stumbled more sharply than expected in July”, with industrial output growth cooling to a more than 17-year low, as the intensifying US trade war took a heavier toll on businesses and consumers.

Meanwhile, freight analysts have also been downgrading their expectations for growth this year, partly as a result of the US-China trade dispute.

The delay in tariffs on a substantial portion of a $300 billion list of remaining Chinese imports sent US stocks surging, after steep losses in the past week, Reuters noted, with the Standard & Poor’s 500 .SPX up 1.5% and the Nasdaq Composite .IXIC gaining nearly 2%. Shares of market bellwether Apple Inc soared 4.2% on news that its core iPhone, tablet and laptop computer products would be spared from tariffs for the time being.

Source: Lloyd’s