Tariff reprieve provides ‘relief’

The US administration's plan to suspend tariffs on billions of dollars of Chinese imports set to kick in on Sunday is a "big relief" that makes sense, trade experts said on Thursday, as business groups continue to lobby for the reduction and removal of tariffs.

The administration has agreed to hold off on President Donald Trump's plan to impose tariffs on about $160 billion in Chinese-made consumer goods that include laptops, smartphones, certain toys, footwear and clothing. It also has agreed to reduce existing tariffs, according to US media reports.

In return, Beijing would buy more US agricultural products and increase American companies' access to the Chinese market, the reports said.

The White House and the Chinese side had not released any official statements as of 9 pm ET, raising questions about whether the reports were speculation and if both sides had agreed to terms.

Early on Thursday, Trump tweeted: "Getting VERY close to a BIG DEAL with China. They want it, and so do we!"

That sentiment was echoed by Myron Brilliant, executive vice-president and head of international affairs at the US Chamber of Commerce, who told the media, "We're close to a deal."

Brilliant also tweeted on Thursday, "The best gift consumers, manufacturers, farmers could receive this holiday season would be passage of #USMCANow and a China phase one deal."

The USMCA, or the US-Mexico-Canada Agreement, is a new North American trade deal that was signed by the three countries on Tuesday.

The concept of a "phase one deal" emerged two months ago, when Chinese and US trade negotiators made "substantial progress" in several fields, including agriculture and intellectual property protection, in their two-day talks in Washington.

"The next round of tariffs would have been an unmistakable 'own goal', hurting American companies and consumers more than China," said Douglas H. Paal, distinguished fellow of Asia Program of the Carnegie Endowment for International Peace, who used a term that refers to a soccer team hitting the ball into its own net.

"Even Trump saw its downsides, so it makes every sense to avoid the new round," Paal told China Daily.

The US administration has increased tariffs on imports from China since early 2018, slapping 25 percent duties on $250 billion worth of Chinese goods so far. It suspended a prospective tariff increase on those products, from 25 percent to 30 percent, which was set for Oct 15.

In late August, Trump announced a tariff of 15 percent on a remaining $300 billion in Chinese goods, set for Sept 1. He later delayed more than half of the latest round of tariffs until Dec 15 to blunt the impact on holiday shopping. Many of the products sold during the season are made in China.

Paal noted that drifting into an impeachment timetable and election season is always bad for trade deals.

"Much better to get it out of the way. The deal helps Trump politically more than it hurts him, and that's probably marginally true for China as well. Both sides are looking for a little stability," he said.

Gary Hufbauer, a senior fellow and trade expert at the Peterson Institute for International Economics, another think tank in Washington, said it's a "big relief" not to have a new round of tariffs.

"This is good news for Christmas shopping and for business confidence. The stock market is very happy," he said in an email. "I think the stage is being set for a phase one agreement that tamps down the trade wars for a while."

Also on Thursday, the American Apparel & Footwear Association (AAFA) sent a letter to Trump emphasizing the need for a first-phase deal that eliminates current tariffs and removes the threat of those scheduled to take effect on Sunday.

"While the punitive tariffs imposed by both the US and China over the past 15 months have brought attention to issues plaguing the US/China trade relationship, they have also caused severe damage to US companies, the millions of US workers they employ, and the hundreds of millions of US consumers they service," wrote Rick Helfenbein, president and CEO of the AAFA.

The AAFA letter followed one issued to Trump a day before by some 150 business groups under an umbrella organization, America for Free Trade, which urged him to delay the tariff increase to avoid harming US consumers over the holidays.