In what many hope are signs of a deescalation of the current trade war, China released a list of exemptions for their current tariffs against US imports. Fish meal, alfalfa, and lubrication oil are among the products listed for exemptions on the 25% tariffs imposed by China last year. In what he’s calling a gesture of good will, President Trump has pushed back the date of increase for the first 3 lists of tariffs until October 15th as the original date of October 1st is the 70th anniversary of the People’s Republic of China.
After a month of updates, corrections, comments and retaliation, the Federal Register has established the most current information on tariffs levied on Chinese imports to the US. On September 1, 2019 the first part of the 4th tranche of tariffs went into effect at a 15% duty rate, 5% higher than originally announced. The second part of the 4th tranche will go into effect on December 15, 2019 at the +5% rate of 15% in hopes of avoiding impacting consumers during the holiday shopping season.
The first three tranches have been revisited to a 30% tariff to be effective on October 1, 2019. The increase came after tensions between the US and China rose when China retaliated on the US with tariffs on $75 billion in US goods. When the newest tariffs started on September 1, 2019 China declared that they’d impose a 5% duty on US crude oil, for the first time since the trade spat began more than two years ago. With the next round of increases set to start on October 1, 2019 both sides have commented they’re ready to continue negotiations with regard to more favorable outcomes before further escalation takes hold. However, those meetings aren’t scheduled to take place until early October, which doesn’t bode well for the opportunity to prevent the increases in duties that are currently scheduled.
Beyond the numbers released by the Federal Register, the tariffs are expected to increase costs to US households by approximately $1000/year. These increases give customs cause for concern that some suppliers will attempt to manufacture goods in China and then transship via other nations, most likely Vietnam, to avoid paying the duties applied. President Trump has also ordered that US manufacturers begin looking for suppliers outside of China to buy from or move their manufacturing business back to the United States in the hopes of rekindling the sector for jobs and economic growth.
Fears of a global recession brought on by the continued escalation of the trade war between the US and China have been growing as analysts view the increasing costs as detrimental to growth and the sustainability of a bull market. Trans-Pacific trade has been under a microscope since before the 45th administration took office as the TPP and debates on its merit brought out major pain points and issues to be wary of for consumers and suppliers.
We at Everglory will continue monitoring this situation and bring the most current, confirmed news we have to our readership.