WASHINGTON -- President Donald Trump's trade office announced Tuesday that a sizable portion of the proposed new tariffs on $300 billion of Chinese imports would be delayed until Dec. 15, backing down from Trump's threat to apply the 10% penalty on Sept. 1.
Many U.S. retailers and other businesses had complained that the new tariffs would make household products more expensive for American consumers, just in time for back-to-school purchases and later the Christmas shopping season. Economists had also been sounding alarms, saying the escalating trade war was increasing the odds of an economic downturn next year.
The Office of the U.S. Trade Representative said in a short statement that some of the new 10% tariffs would take effect as planned on Sept. 1. However, the USTR said that many items, including cellphones, laptops, video game consoles, and certain shoes and clothes, would not be hit with the new duties until mid-December. Cellphones account for about $40 billion of imports from China.
Reaction in financial markets was swift. U.S. stocks, which had been reeling in recent days from heightened trade tensions, immediately soared, with the Dow Jones industrial average surging more than 500 points before tailing off somewhat. Tech stocks rose as Apple shares jumped, the dollar gained and oil prices rebounded.
The USTR did not explain why it had decided to delay tariffs on those goods, saying only that it was "part of USTR's public comment and hearing process." Over several days in June, the USTR heard from dozens of companies and business groups, many of them voicing concerns about the upcoming tariffs.
In earlier rounds of tariffs, Trump eventually slapped 25% duties on about $250 billion of imports from China, but many of those goods were machinery and industrial parts used for production. The latest 10% tariffs, on the remaining $300 billion of Chinese imports, were poised to hit many consumer products.
Trump announced the new tariffs on Aug. 1 shortly after U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven T. Mnuchin returned from talks with the Chinese in Shanghai. Sources said Trump, angered by the lack of progress, issued the tariff threat against the advice of top officials. He accused Beijing of failing to make good on its alleged promise to buy a lot of U.S. farm products.
Shortly after the delay announcement Tuesday, Trump criticized China. "As usual, China said they were going to be buying 'big' from our great American Farmers. So far they have not done what they said. Maybe this will be different!" Trump tweeted.
Over the last year of the U.S.-China trade war, Trump has repeatedly threatened tariffs, only to back off deadlines, often as markets sank. But little by little, higher tariffs have been assessed on about half of all imports from China, and Beijing has responded with retaliatory duties on most of its imports from the United States.
Still, the president's heavy rhetoric and abrupt announcements of tariffs as a tactic to pressure the Chinese have shaken financial markets and created a lot of uncertainty among U.S. businesses and for the global economy.
With the latest delay in tariffs, once again there were renewed hopes in markets of a resolution to the U.S.-China trade war. A team from China is expected to come to Washington next month to resume negotiations.
Even so, many analysts doubt that the two sides are ready to make compromises that would lead to a comprehensive deal addressing American complaints about China's state-run economy, including the heavy government subsidization of companies and requirements that foreign firms hand over technologies in order to access China's large markets.
(c)2019 Los Angeles Times
Visit the Los Angeles Times at www.latimes.com
Distributed by Tribune Content Agency, LLC.