US-China trade war: Focus on Trump as December 15 deadline nears

Reuters Washington | Updated on December 11, 2019

US President Donald Trump (file photo)   -  REUTERS

Washington is laying the groundwork for a delay in the latest round of tariffs

US President Donald Trump has days to decide whether to impose tariffs on nearly $160 billion in Chinese consumer goods just weeks before Christmas, a move that could be unwelcome in both the United States and China.

The White House's top economic and trade advisers, including Trade Representative Robert Lighthizer, Larry Kudlow, Peter Navarro, and Treasury Secretary Steven Mnuchin are expected to meet in coming days with Trump over that decision, one person briefed on the situation said. There is still no clarity on what the decision will be.

‘No decision’

Washington is laying the groundwork for a delay in the latest tariffs, scheduled to take effect on December 15, but a final decision has not been made, the person told Reuters. If the White House does allow the December 15 tariffs to take effect, then the US-China deal talks are likely done for the remainder of President Trumps term, the source said.

“Either way we're going to be in a great place ... The president loves them (the tariffs),” Navarro told Fox Business Network during an interview Tuesday. “If we get a great deal, we'll be in a good place as well. But it will be the president's decision. It will come soon.”

Also read: We’re in the final throes of a very important deal, says Trump

The way the tariffs are written, the Trump administration has to act, or else they automatically go into effect, trade experts said. “Unless USTR (the US Trade Representative) issues a notice of modification for these tariffs, they will take effect on December 15 as scheduled,” said Tami Overby, senior director at McLarty Associates, a Washington-based trade consultant.

Kudlow, director of the White Houses National Economic Council, also said late Tuesday morning no decision had been made. “The reality is those tariffs are still on the table, the December 15 tariffs, and the President has indicated if the short strokes remaining in negotiations do not pan out to his liking that those tariffs could go back into place,” Kudlow said at a Wall Street Journal conference.

Meeting deadlines

The Trump administration said in August it would put 15 per cent tariffs on billions in Chinese-made consumer goods on December 15. Known as the “4B” list of goods, those tariffs would hit video game consoles, computer monitors, Christmas decorations, toys and other items including clothing often given as gifts.

Also read: China keen on ‘phase-one trade deal’ with US

The White House has been deliberating for weeks whether or not to impose the tariffs, and said in early November they would likely be averted if a Phase-1 deal was reached. Both sides have still not reached agreement on crucial parts of the deal. These include the amount of US agricultural goods Beijing would agree to purchase and when the US would roll back other tariffs it imposed on Chinese goods, people briefed on the talks said.

In November, the Trump administration failed to meet its own deadline to impose tariffs on auto imports under a “Section 232” investigation. The White House needs to find another way to tax foreign cars after letting that deadline lapse, trade experts told Reuters.

‘Terrible optics’

Goods that would be affected by the December 15 tariffs include industrial products like pesticides and other chemicals, but also a bevy of consumer items that are in heavy demand around the Christmas and New Years holidays, according to a Reuters analysis of the tariff list announced in August. They include plastic tableware, handbags, photo albums, woolen bathrobes, silk pajamas, turntables and jewelled wristwatches.

While most goods that Americans will buy before Christmas had been shipped long before, retailers could add opportunistic price increases, trade experts said. “Trump does not want to do that right before Christmas. The optics would be terrible,” William Reinsch, a former senior US Commerce official and trade expert at the Center for Strategic and International Studies, told Reuters in November.

Published on December 11, 2019

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