The White House on Tuesday said it would delay imposing tariffs on Chinese imports of cellphones, laptop computers, video game consoles, and certain types of footwear and clothing until Dec. 15, significantly later than the Sept. 1 deadline President Trump had repeatedly threatened.
The announcement, which came from the Office of the U.S. Trade Representative, likely ensures that Apple products and other major consumer goods would be shielded from the import tax until at least December, potentially keeping costs on these products down during the holiday shopping season.
The announcement moved stocks sharply higher. The Dow Jones industrial average climbed close to 500 points, or nearly 2 percent, on the news. The stock prices of Apple, Best Buy, Mattel and Macy’s were among those that rallied on the announcement.
The White House did not give a full explanation as to why these items were being exempted, only saying in a short statement that it was part of USTR’s “public comment and hearing process.” A number of companies had petitioned to the White House to exempt items they import from the new tariffs, saying the costs would be either passed along to the consumer or threaten the solvency of individual firms.
USTR said the 10 percent tariff would still go into effect in September on some items, which it did not immediately identify. But it said tariffs on other items would be waived completely “based on health, safety, national security and other factors.”
Trump, in a Twitter post, seemed to suggest that the announcement was meant as an overture to Chinese officials.
“As usual, China said they were going to be buying “big” from our great American Farmers,” he wrote. “So far they have not done what they said. Maybe this will be different!”
USTR said it would be providing a list of products that were exempted and would face the delayed tariff implementation date.
The announcement is the latest in a herky-jerky trade war between the White House and China. Trump has levied tariffs on $250 billion in Chinese imports, beginning last year, as he has tried to pressure Chinese leaders to change their trade practices. Chinese officials have negotiated but refused to agree to the terms Trump has demanded, leading to a prolonged standoff.
Trump has frequently threatened dramatic penalties, however, only to back away. His threat of imposing a 10 percent tariff on an additional $300 billion in Chinese imports starting next month spooked investors and many lawmakers, and it has led to a steady slide in the stock market in the past two weeks.
“These tariffs were Trump’s idea. Now his team is trying to clean this up,” said Steve Pavlick, a former Trump Treasury Department official who is now head of policy at Renaissance Macro Research. “I don’t think it’s a coincidence that you see this right before Christmas. They are trying to minimize the impact.”
Many businesses had worried that higher tariffs on consumer goods ahead of the Christmas shopping season could severely damage the economy at a time when some are warning that the risk of a recession next year has increased.
Trump has pressed China for months to change its trade practices, calling on it to change the way it subsidizes domestic companies, among other things. The White House has also accused China of stealing intellectual property from U.S. companies and forcing U.S. firms to transfer technology to Chinese firms.
But Trump’s demands in recent weeks have shifted, a sign of the political peril that the prolonged trade war has raised.
Trump had originally threatened to impose these new tariffs on $300 billion in consumer goods by early July, but at a June meeting with Chinese President Xi Jinping, Trump agreed to hold off. At the meeting, held during the Group of 20 summit in Osaka, Japan, Trump said the Chinese had agreed to dramatically increase purchases of U.S. agricultural goods, a nod to the U.S. farm industry that had become increasingly incensed about being caught in the middle of the trade war.
But Chinese officials never agreed to purchase the farm products Trump had promised, and this soon became clear to the U.S. agriculture industry.
Several weeks ago, U.S. Trade Representative Robert E. Lighthizer and Treasury Secretary Steven Mnuchin flew to Shanghai to meet with Chinese leaders about restarting trade negotiations. Those discussions went poorly, people briefed on the outcome said.
Trump had recently said that the Chinese seemed intent to wait until after the 2020 election before they would cut a deal with him, and he seemed content with that. But when he heard back from Mnuchin and Lighthizer about how poorly the trip had gone, he announced that he would move ahead with the 10 percent tariff on $300 billion in Chinese goods.
USTR’s announcement on Tuesday that it would delay the imposition of these tariffs on some of the most popular consumer goods was the first sign that Trump was backing down from this demand. Still, the mid-December tariff deadline could raise fears among major retailers and importers about higher costs during a crucial window for revenue.
“It would be a whole lot easier if the tariffs started in January,” said Win Cramer, chief executive of JLab Audio, which makes wireless headphones and ear buds. “It would still be awful, but the fact of the matter is our holiday promotions, which are with every major retailer nationwide, are already designed and ready for print.”
By Damian Paletta and Heather Long/WAPO
Posted by The non-Conformist