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Trump delays tariff hike initially scheduled for March

Dive Brief:

  • Tariffs on $200 billion worth of imports from China will remain at the current level of 10% for the time being, after President Donald Trump tweeted Sunday evening he would delay the scheduled increase to 25%. He did not specify the future date until which the tariff hike might be delayed.
  • The President in a two-part tweet pointed to “substantial progress” in trade talks between the U.S. and China, and called the negotiations “very productive.”
  • “Assuming both sides make additional progress, we will be planning a Summit for President Xi and myself, at Mar-a-Lago, to conclude an agreement,” Trump tweeted. He did not say when the summit would be held.

Dive Insight:

Trump has alluded over the past several weeks to the possibility he would extend the trade deadline, originally scheduled for this upcoming Friday, March 1.

The initial deadline was set after he met with Chinese President Xi Jinping at the G-20 summit in Buenos Aires last year. Several rounds of trade talks have taken place in the U.S. and China since then. U.S. Trade Representative (USTR) Robert Lighthizer led the most recent round of high-level discussions this past Thursday in Washington.

The tweets from Trump come in contrast to Lighthizer’s repeated message that March 1 is a “hard deadline” for the U.S. and China to hammer out a deal. The USTR had not released a statement on the tariff delay as of press time.

Trump, along with several members of the administration, cited progress in a series of trade negotiations between the two countries, but no one has revealed significant details of what the progress entails. The White House also has not released a statement confirming Trump’s tweets or offering specifics on the progress of the trade talks.

Lighthizer will testify before the House Ways and Means Committee Wednesday, which may give us some specifics on the trade discussions and what progress was made related to intellectual property, technology transfer and additional issues the U.S. and China set out to resolve.

Trump said previously no trade resolution would be finalized until he and Xi met. If the two presidents meet in the near future, as Trump hinted in his tweet, it may be a sign a trade deal is in the cards.

What that means for tariffs, however, is uncertain. Trump said he would delay the tariff increase, but did not specify to what date, leaving businesses in limbo. It’s also important to note Trump said he would “delay” — but not cancel — the tariff increase.

For now, companies should still expect to see tariffs rise to 25%. The question is, when?

24 February 2019 | Shefali Kapadia | Supply Chain Dive

https://www.supplychaindive.com/news/trump-delays-tariff-hike-china-200-billion-march/549074/

US-China trade talks resume in Washington

Dive Brief:

  • The U.S. and China will hold additional rounds of trade talks this week in Washington, the White House announced Monday.
  • “Deputy-level meetings” begin Tuesday, the White House said, led by Deputy United States Trade Representative Jeffrey Gerrish. The U.S. will hold “principal-level meetings” starting Thursday. U.S. Trade Representative Robert Lighthizer will lead those talks, which will also include Treasury Secretary Steve Mnuchin, Commerce Secretary Wilbur Ross, Assistant to the President for Economic Policy Larry Kudlow and Assistant to the President for Trade and Manufacturing Policy Peter Navarro.
  • The two countries will discuss structural changes related to trade and China’s agreement to “purchase a substantial amount of goods and services” from the U.S., but did not offer additional details, the White House said.

Dive Insight:

The administration has kept mum for the most part on details of the ongoing trade talks between Washington and Beijing.

After the most recent round of talks, which took place in Beijing, U.S. officials touted “progress” on trade issues the two countries set out to resolve during a 90-day negotiation period, but they offered no specific detail on what that progress entailed.

China purchased shipments of soybeans from the U.S. (the exact amount is unclear) since the trade talks began, a sign of progress in China agreeing to import “substantial” amounts of goods from the U.S. On structural issues such as intellectual property and technology transfer, however, neither the U.S. nor China has revealed any specific progress.

Donald Trump hinted last week he might consider an extension to the March 1 trade negotiation deadline, although the White House made no mention of that in its latest announcement on continuing trade talks. Lighthizer previously called March 1 “a hard deadline.”

The numerous unknowns surrounding trade talks and deadlines leave businesses in a state of uncertainty related to tariffs.

Economic Policy Uncertainty uses economic data and news reports to create a monthly index of uncertainty. In January 2019, it measured U.S. uncertainty at an index of 292, an all-time high since the index began tracking data in 1997 and slightly higher than the global index of 285. In January 2017, the U.S. index measured just 161.

Still, analysts are hopeful the U.S. and China will reach a deal later this year, though it likely will come after the March 1 deadline, and it’s unclear what effect the trade deal would have on existing and future tariffs.

19 February 2019 | Shefali Kapadia | Supply Chain Dive

https://www.supplychaindive.com/news/us-china-trade-talks-washington-lighthizer/548682/

Trump, Xi won’t meet before March 1 tariff deadline

Dive Brief:

  • President Donald Trump told reporters at the White House Thursday he would not meet with Chinese President Xi Jinping before the March 1 deadline, after which 10% tariffs are set to rise to 25%. Trump said previously he would meet Xi in February.
  • When asked by reporters if he planned to meet with Xi next month, the President said, “Not yet. Maybe. Probably too soon. Probably too soon,” according to Reuters.
  • U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will travel to Beijing next week for another round of trade discussions. Lighthizer and Chinese Vice Premier Liu He met last week in Washington for trade talks.

Dive Insight:

Trade discussions between the U.S. and China are far from over. Several rounds have taken place since Trump and Xi agreed to a 90-day halt on tariff increases last year at the G-20 summit, and additional discussions are scheduled for next week.

But the likelihood of reaching a deal in the near future is waning. The deadline is rapidly approaching with no plans in place for the two presidents to meet. “No final deal will be made until my friend President Xi, and I, meet in the near future,” Trump tweeted on Jan. 31.

What happens to tariff rates on March 2 remains unclear. After the 90-day “cease-fire” was announced, the Trump administration maintained tariffs on $200 billion worth of Chinese imports would rise from 10% to 25% if the two parties did not reach a deal before the deadline.

“The likely outcome is that the tariffs remain at the current 10 percent rate,” CNBC reported Thursday, citing administration officials and sources briefed by the White House.

But Reuters later cited three anonymous sources who indicated the CNBC report was incorrect.

Maine Pointe CEO Steve Bowen told Supply Chain Dive he doesn’t expect Trump to back down “one iota” from his plan to raise tariffs and negotiate trade issues with China.

He does anticipate the U.S. and China could reach a deal later this year to remove the tariffs, with the upcoming election cycle playing a role in the timing. The CEO of agricultural trader Archer Daniels Midland (ADM) made a similar prediction, expecting a trade resolution with China this year.

The March 2 tariff hike (if it happens) won’t come as a surprise to the business world. The U.S. and China sought to resolve deep-seated trade issues in just three months, and analysts largely agreed the short time frame did not provide sufficient time for matters such as intellectual property and technology transfer.

Businesses have been planning for the scenario of rising tariffs at the beginning of next month, by rushing imports and stockpiling goods — although that doesn’t mean companies are embracing increased duties.

“Retailers are doing our best to mitigate the pain, but raising tariffs on thousands of consumers products causes massive disruption to retailers in an already uncertain environment,” Hun Quach, Vice President for International Trade at the Retail Industry Leaders Association, told Supply Chain Dive in an email. She described the deadline as a “black cloud.”

study released Wednesday by Tariffs Hurt the Heartland, a campaign opposed to tariffs, said an increase to 25% would reduce employment by 934,000 jobs and GDP by 0.37%.

Until now, a good deal of optimism has surrounded the U.S.-China trade negotiations, which Bowen said lead some companies to relax a bit and back off of their contingency planning. “They’re making a mistake because they need to be prepared,” he said.

07 February 2019 | Shefali Kapadia | Supply Chain Dive

https://www.supplychaindive.com/news/trump-xi-wont-meet-march-1-tariff-deadline/547998/

A trade deal with China is ‘miles and miles’ away, Commerce secretary says

Dive Brief:

  • A delegation of roughly 30 Chinese trade negotiators will visit the White House next week to resume trade negotiations, but U.S. Commerce Secretary Wilbur Ross told CNBC Thursday, “we’re miles and miles from getting a resolution.”
  • The next round of negotiations taking place next week is the result of a 90-day delay of further tariff hikes that runs out March 1. After that, tariffs on $200 billion in Chinese goods will increase from 10% to 25% if the parties cannot reach an agreement.
  • Ross said negotiators have “quite a little bit of time” before March 1 to figure out if a deal is possible. Courtney Rickert McCaffrey, manager of thought leadership in A.T. Kearney’s Global Business Policy Council, told Supply Chain Dive in December the March 1 timeline is “incredibly ambitious.”

Dive Insight:

Ross said it shouldn’t be surprising a deal hasn’t yet taken shape since “trade is very complicated.” He added negotiations go far beyond quantities of fuel and other commodities, and the real differences are in “structural reforms” in the Chinese economy and “enforcement mechanisms.”

Though China has made some concessions in agreeing to purchase more U.S. agricultural products, the White House has made it clear the issues of intellectual property and technology transfer are the tougher and more important issues.

In December, the Trump administration said in a said in a statement that these negotiations would revolve around “structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture.”

In his comments, Ross left wide open the possibility that the two parties could indeed reach an impasse, allowing tariffs to rise.

24 January 2019 | Emma Cosgrove | Supply Chain Dive

https://www.supplychaindive.com/news/tariffs-China-trade-negotiations-Wilbur-Ross/546764/

NAFTA Nations to Meet Again, Mexico Says Deal ‘Possible’ in Days

Negotiators are plowing ahead to try to secure a deal by May 1, which is also when temporary exemptions for U.S. steel and aluminum tariffs on imports from Canada and Mexico are due to expire, sources say.

The U.S. and its NAFTA partners are stepping up efforts to reach a tentative deal in the coming days — with one Mexican minister saying a pact is “reasonably close” while the U.S. prepares for talks with China.

U.S. Trade Representative Robert Lighthizer met for a third straight day Thursday with Canadian Foreign Affairs Minister Chrystia Freeland and Mexican Economy Minister Ildefonso Guajardo, with talks resuming Friday. Freeland on Thursday noted “significant progress’’ on the key issue of rules for cars, while Guajardo cautioned they are juggling many “highly complex” issues.

Negotiators are plowing ahead to try to secure a deal by May 1, which is also when temporary exemptions for U.S. steel and aluminum tariffs on imports from Canada and Mexico are due to expire, according to three people familiar with the talks who asked not to be identified. Lighthizer will join Treasury Secretary Steven Mnuchin on a trip to China that’s expected next week for discussions on how to resolve a simmering trade dispute.

Mexican Foreign Minister Luis Videgaray said an agreement within a few days is “definitely possible,” but two other ministers in talks warned that key issues remain, meaning a quick windup is still far from certain.

Trump Optimism

Even if an accord is struck on car rules, division remains over a sunset clause, dispute panels and other issues. When asked by reporters outside his office Thursday if a deal is possible in coming days, Lighthizer declined to comment.

The U.S. and its NAFTA partners are stepping up efforts to reach a tentative deal in the coming days — with one Mexican minister saying a pact is “reasonably close” while the U.S. prepares for talks with China.

U.S. Trade Representative Robert Lighthizer met for a third straight day Thursday with Canadian Foreign Affairs Minister Chrystia Freeland and Mexican Economy Minister Ildefonso Guajardo, with talks resuming Friday. Freeland on Thursday noted “significant progress’’ on the key issue of rules for cars, while Guajardo cautioned they are juggling many “highly complex” issues.

Negotiators are plowing ahead to try to secure a deal by May 1, which is also when temporary exemptions for U.S. steel and aluminum tariffs on imports from Canada and Mexico are due to expire, according to three people familiar with the talks who asked not to be identified. Lighthizer will join Treasury Secretary Steven Mnuchin on a trip to China that’s expected next week for discussions on how to resolve a simmering trade dispute.

Mexican Foreign Minister Luis Videgaray said an agreement within a few days is “definitely possible,” but two other ministers in talks warned that key issues remain, meaning a quick windup is still far from certain.

Trump Optimism

Even if an accord is struck on car rules, division remains over a sunset clause, dispute panels and other issues. When asked by reporters outside his office Thursday if a deal is possible in coming days, Lighthizer declined to comment.

“We are more concerned with having a good agreement than a quick agreement, but I think we are reasonably close,” Videgaray said Thursday evening, leaving the meeting. “Certainly this has been a great week.”

The mood is optimistic within the White House. Talks are “moving along,” President Donald Trump said Tuesday. “I could make a deal very quickly, but I’m not sure that’s in the best interest of the United States. We’ll see what happens, but we’re doing very well,” he said.

Still, all three countries have reason to hope for an agreement soon. Canada and Mexico were both temporarily excluded from recent U.S. tariffs on steel and aluminum, with the Trump administration linking permanent relief to the successful renegotiation of NAFTA.

‘Essential Step’

Talks Thursday included White House aide Jared Kushner and Katie Telford, chief of staff to Canadian Prime Minister Justin Trudeau, reflecting the push to get a deal. Freeland, meanwhile, hailed progress on rules that govern what share of a car must be made within NAFTA countries to be traded tariff-free under the pact, and skipped a North Atlantic Treaty Organization meeting to attend more talks.

“Something really significant has happened this week, which is that we have moved from a conceptual level on rules of origin on cars to really talking about the details. That is an essential step,’’ Freeland said before the meeting. Afterward, she added: “We have been making good progress this week. We are not done yet, but this is really, really important.”

Guajardo said a deal is not quite done. “We are still in the process. And we’ll keep on moving in the right direction,” he said. “There are too many items, all of them are highly complex, we are basically engaging in those discussions and we will keep on doing that.”

Flavio Volpe, head of the Toronto-based Automotive Parts Manufacturers’ Association industry group, cautioned that the U.S. hasn’t put many of its recent proposals in writing. He said a deal on autos is possible by Tuesday but warned other key disputes remain unsolved.

“I think we can have a deal if the Americans want to have a deal,’’ he said. “The space we’re in is positive, but I don’t have text’’ that details specific proposals or agreed changes.

Divisions Remain

Not everyone is applauding, however. Canada and the Mexico, typically united in the face of Trump’s demands, appear to be diverging on a U.S. proposal to require a share of a car –- 30%, according to Jerry Dias, head of Canadian labor group Unifor — be made with a minimum wage of about $15.

The provision would, if adopted, effectively mean that share is made in the U.S. or Canada. Mexico opposes it, according to two people familiar with talks, speaking on condition of anonymity. Volpe said there’s indeed “anxiety’’ on the issue but no firm proposal; Dias said Mexico has been “balking’’ at certain issues.

 

27 April 2018 | Josh Wingrove, Andrew Mayeda and Eric Martin | Industry Week

http://www.industryweek.com/economy/nafta-nations-meet-again-mexico-says-deal-possible-days