Trump Delays Planned Tariff Increase in ‘Gesture of Good Will’ to China
The United States would delay a planned increase in its 25 percent tariff on $250 billion of Chinese goods from Oct. 1 to Oct. 15, a move that was made “at the request of the Vice Premier of China, Liu He, and due to the fact that the People’s Republic of China will be celebrating their 70th Anniversary on October 1st,” the president said in a tweet.
The move comes as trade talks between the United States and China have stagnated, leading to stock market volatility and consternation among businesses that have paid higher prices to import and export goods. Despite months of talks, negotiators still appear far from a comprehensive trade deal that would resolve the Trump administration’s concerns about Chinese economic practices, including its infringement on American intellectual property.
The president’s announcement will delay tariffs by only two weeks. But it could allow negotiators to meet ahead of the next round of tariffs, raising the potential for that increase to be averted.
The two sides were on the cusp of a trade deal this spring, when Chinese leaders decided that some American demands to change their laws infringed too much on Chinese sovereignty. Since then, Mr. Trump has moved ahead with taxing an additional $112 billion of Chinese products, and he was expected to raise tariffs even further on Oct. 1. China imposed additional tariffs on $75 billion worth of American goods in retaliation.
Tensions between the two sides have eased slightly in recent weeks, with Chinese officials agreeing to travel to the United States in October for the next round of talks. On Wednesday, China published a short list of American products that would be exempt from its new tariffs, and said it would announce more exemptions in coming weeks. The exemptions included cancer drugs and certain chemicals that China does not produce domestically, but it did not include American exports like pork and soybeans, which have been targeted by Beijing as punishment for Mr. Trump’s tariffs.
In remarks in the Oval Office on Wednesday, Mr. Trump greeted the exemptions as a sign that China would soon compromise, saying that the trade war “was only going to get worse” and “they want to make a deal.”
“They took tariffs off, certain types,” he said. “I think it was a gesture. It was a big move. People were shocked. I wasn’t shocked.”
In another gesture on Thursday directed at easing trade tensions, China’s Ministry of Commerce said that some Chinese companies were beginning to make inquiries about resuming purchases of American agricultural products.
“Soybeans and pork are all within the scope of inquiry,” Gao Feng, a spokesman for the ministry, said. “I hope that China and the United States will move in the same direction and create favorable conditions for consultations.”
On other fronts, the Trump administration continues to move ahead with more stringent treatment of China. The administration has drafted an executive order that would increase inspections of mailed packages, in an effort to crack down on shipments of counterfeit goods and deadly drugs from foreign nations including China.
The order would empower the United States Postal Service to increase inspections of small packages that arrive in the country by air, according to several people familiar with the draft, who declined to be named because they were not authorized to speak publicly. That would help to close a loophole that has allowed dangerous drugs like the opioid fentanyl and other contraband to pass into the United States unchecked.
The measure is not aimed specifically at China. But Mr. Trump has often accused China of failing to stop shipments of fentanyl from flowing into the United States. Mr. Trump said late last month that he was directing the Postal Service and private American companies like FedEx, Amazon and UPS to search packages from China for fentanyl and refuse delivery. On Sept. 1, Mr. Trump placed more tariffs on Chinese imports as punishment for Beijing’s failure to stop fentanyl shipments and its refusal to buy more agricultural goods from the United States.
“Fentanyl kills 100,000 Americans a year. President Xi said this would stop — it didn’t,” Mr. Trump said in a tweet last month, referring to Xi Jinping, China’s president.
The executive order would apply solely to the Postal Service, not private companies like FedEx or UPS. The order is drafted to apply to all countries, though the effects would fall most heavily on China, a major source of both counterfeit products and fentanyl as well as small packages shipped into the United States.
Regarding the trade talks, China and the United States appear to still have substantive differences. Chinese officials have emphasized recent changes they have made to laws governing foreign investment and intellectual property, rather than discussing the more significant changes the Trump administration has demanded.
Mr. Trump has ordered American companies out of China and expressed satisfaction at the damage his tariffs are wreaking on its economy.
Business leaders say they are already struggling under the tariffs, and predict lower profits and wage cuts if further levies — more are set for December — go into place. A poll by the American Chamber of Commerce in Shanghai published Wednesday said the trade war was weighing on its members’ projections for revenue growth, optimism about the future and future investment plans. Moody’s Analytics estimates that the trade war has already cost 300,000 American jobs, a toll that could increase to nearly 450,000 by the end of this year and nearly 900,000 jobs by the end of next year, assuming Mr. Trump’s planned tariff increases go into effect.
In recent months, some of the focus has shifted away from the terms of the trade deal itself to whether there can be an interim agreement that would involve Chinese purchases of American agricultural products and smooth over relations between the countries.
Chinese officials and their contacts have floated the idea of restarting agricultural purchases, in return for the United States postponing further tariff increases and offering some relief for Huawei, the Chinese telecom giant that has been blacklisted from buying American products, several people familiar with the matter said.
Mr. Trump has been deeply frustrated by China’s refusal to purchase American agricultural products in recent months. The move would help the president by buoying a constituency that is important for him politically and also increasingly opposed to the trade war.
But such an interim agreement has also proved elusive. The president and his advisers are increasingly aware of the national security risk posed by Huawei, and cognizant that they would face criticism from Democrats and Republicans alike if they relent. Companies have submitted more than 120 applications to the Commerce Department to supply certain nonsensitive products to Huawei, but no applications have yet been approved.
American officials may consider removing some tariffs in return for economic concessions from China, but they are unlikely to do so for agricultural purchases, Mr. Trump’s allies say.
The Chinese, meanwhile, know that agricultural purchases would reduce the political pressure on Mr. Trump and potentially increase his chances of re-election, and they are not likely to trade away this source of leverage easily, people familiar with their thinking said.
At a Senate hearing Tuesday, Treasury Secretary Steven Mnuchin said the two countries were discussing soybean purchases, but pushed back on suggestions that the United States would be easily bought off.
“I’ve been accused at times of just wanting to sell soybeans. That’s not what we’re trying to do,” Mr. Mnuchin told lawmakers in the hearing. “We want to make sure that China treats our farmers fairly and doesn’t retaliate against the farmers in an unfair way.”
“As part of any discussion, we are talking about ag purchases,” he told reporters after the hearing. “That’s very important to us, defending our farmers.”
Alan Rappeport contributed reporting from Washington, and Alexandra Stevenson from Beijing.