Last week, news around the industry was that progress continued to be made on a trade deal between the USA and China, and that the end of some tariffs may be drawing nigh. However, in a series of Tweets over the weekend, President Trump threatened expanded tariffs on current lists and possibly even imposition of new tariffs on the whole of all imports from China. The reduction or removal of these tariffs has been a central point in all ongoing negotiations.
While senior advisors had been commenting that things were progressing and a deal was imminent, the President disagreed. Due to setbacks in the negotiations, the third list still standing at a 10% duty would be soon raised to 25% perhaps as early as this Friday. There were also threats that the remaining $325 billion of products that haven’t been hit by a duty would also be subject to 25%. If this happens, then the entirety of products coming from China would be hit with tariffs across the board.
The announcement caught Wall Street, the trade industry, and evidently even the Chinese delegation by surprise. The weekday market was primed for a major loss in fears of a deeply escalated trade war, but upon news that negotiations would continue the markets evened out. The meetings scheduled for this Wednesday still remain on the schedule, though their character is likely considerably changed.
If the tariffs are implemented under the same from Section 301 of the Trade Act of 1974, then we assume they would also be eligible for drawback.
In the event a deal is indeed announced and then signed by Presidents Trump and Xi, it would have to be ratified by congress before going into effect. As with the debate happening over the USMCA replacing NAFTA, there is no certainty that it would pass through both houses as agreed.
Right now change continues to happen rapidly in the world of trade, and we will continue to keep our customers informed as changes happen. If you have any questions on how this trade deal would affect your company, please contact JM Rodgers’ VP of Sales at agalloway@jmrodgers.com or 973-726-5340.
