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IndustryNet Blog

China tariff increase delayed as "substantial progress" made on trade, currency manipulation

Posted by IndustryNet on Tuesday, February 26, 2019

100000346_exports_freightPresident Trump said Sunday that the U.S. would be delaying the increase in tariffs on $250 billion of Chinese goods, originally scheduled to increase from 10% to 25% effective March 1st.

In two Tweets sent Sunday night, the President referenced “substantial progress” in the latest round of talks with Chinese President Xi Jinping.

So far, talks between the two nations have yielded a final agreement on China’s currency manipulation, the details of which are yet to be announced. China also recently agreed to buy 10 million metric tons of U.S. soybeans, a boon to U.S. farmers who have seen their exports hurt by retaliatory tariffs.

“I am pleased to report that the U.S. has made substantial progress in our trade talks with China on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues,” tweeted the President. “As a result of these very......productive talks, I will be delaying the U.S. increase in tariffs now scheduled for March 1. Assuming both sides make additional progress, we will be planning a Summit for President Xi and myself, at Mar-a-Lago, to conclude an agreement. A very good weekend for U.S. & China!”

The USTR finalized tariffs on $200 billion of Chinese imports to the U.S. back in September 2018 in an effort to address unfair Chinese industrial policies. The finalized list represents roughly 50% of all Chinese goods imported to the U.S.

U.S. Trade Representative Robert Lighthizer had said in a statement released July 10th: “As a result of China’s retaliation and failure to change its practices, the President has ordered USTR to begin the process of imposing tariffs of 10 percent on an additional $200 billion of Chinese imports. This is an appropriate response under the authority of Section 301 to obtain the elimination of China’s harmful industrial policies.”

This is the second time implementation of the tariffs has been delayed.

The USTR’s initial plan was to impose a 10% import tariff September 24th 2018 on the list of nearly 6,000 Chinese products, with the remaining 15% implemented January 1st, 2019.

China then retaliated with its own list of import tariffs on $60 billion worth of U.S. goods at rates between 5-10%.

However, following a fruitful meeting at the trade summit in Buenos Aires in December, the U.S. and China agreed to delay the full implementation of their respective tariffs for 90 days until March 1st.

Challenges for manufacturers

Concerns over tariff action and fears of a trade war have clouded manufacturers’ optimism, even in light of a manufacturing sector that is well into expansion territory.

The ISM’s January report on U.S. manufacturing activity reveals that production, employment and new orders continue to surge. Yet tensions over upcoming tariff deadlines have dominated manufacturing executives’ concerns.

Uncertainty over the tariffs have caused prices to spike, with the ISM’s Prices Paid Index surging over the past several months.

A recent report by the Federal Reserve finds that overall U.S. businesses have shouldered the inflationary burden of ongoing tariff action, with prices rising 0.4% in direct relation to the tariffs now in place.Elderly woman works on auto assembly line

The report cautions that if tariffs were to rise to 25%, this could potentially lead to a 0.3% increase in consumer prices and a one percent increase in prices paid by businesses.

Although domestic suppliers of tariffed goods stand to benefit, manufacturers that rely on imports are concerned about supply disruptions and price hikes.

According to IndustrySelect’s database of 400,000 U.S. manufacturers, roughly 43,000 manufacturers in the U.S. rely on imports for the production of goods.

Many companies have applied for exemptions to the tariffs. Information on applying for an exemption can be found here. Others have turned to industrial marketplaces like IndustryNet to locate domestic suppliers of materials and goods.

List of products currently affected by tariffs

The number of Chinese products subject to the 10% tariffs encompasses a large range of Chinese imports, such as raw materials, industrial chemicals, tools and electronics.

That list full can be found here.

Finding domestic suppliers

IndustryNet maintains up-to-date information on over 400,000 U.S. manufacturers and suppliers of more than 10,000 products and services.

IndustryNet lists suppliers across a range of industries, producing everything from steel and aluminum to air compressorsconveyor belts and printed circuit boards.

Visitors can set up a free user account, build custom lists of potential suppliers, send quote requests, download catalogs, view company photo and video libraries, and more.

IndustryNet is also a direct path for U.S manufacturers to increase their visibility among domestic industrial procurers.

 

 

 

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