US importers received news this weekend that an important agreement has been struck to temporarily put on hold the pending January 1 tariff increases on goods from China to the U.S. The pending 25 percent tariff increases wreaked havoc on this year’s peak season with ocean rates from the Asia to the U.S. hitting five-year highs, as there was a rush to import freight into the U.S. prior to the new year.
Chinese President Xi Jinping and U.S. President Donald Trump put their bilateral trade war on pause, momentarily, striking an agreement to hold off on slapping additional tariffs on each other’s goods after January 1, as talks continue between both countries.
In a White House readout of a dinner at the G-20 summit in Argentina, Xi and Trump discussed a range of nettlesome issues — among them was the trade dispute that has left over $200 billion worth of goods hanging in the balance.
“President Trump has agreed that on January 1, 2019, he will leave the tariffs on $200 billion worth of products at the 10 percent rate, and not raise it to 25 percent at this time,” the statement read. Over the next 90 days, American and Chinese officials will continue to negotiate lingering disagreements on technology transfer, intellectual property and agriculture.
“Both parties agree that they will endeavor to have this transaction completed within the next 90 days. If at the end of this period of time, the parties are unable to reach an agreement, the 10 percent tariffs will be raised to 25 percent,” the statement added.
Meanwhile, “China will agree to purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other product from the United States to reduce the trade imbalance between our two countries. China has agreed to start purchasing agricultural product from our farmers immediately,” the White House said.
The Trump administration had threatened to more than double the tariffs it has already slapped on $250 billion worth of Chinese imports, while Xi’s government has put targeted tariffs on $110 billion in U.S. goods. The standoff has raised fears among investors and businesses that the global economy could be dragged down by the dispute between the world’s two largest economies.
Trump, who made U.S. trade policy a central plank of his platform as a presidential candidate in 2016, wants to address specific gripes with China’s trade practices, especially its alleged theft of U.S. intellectual property.
Source: Pramuk, Jacob. (2018, December 1). US will hold off on raising China tariffs to 25% as Trump and Xi agree to a 90-day trade truce. Retrieved from https://www.cnbc.com/2018/12/01/us-china-wont-impose-additional-tariffs-after-january-1-report.html