Trade

Report: Trump Will Back Down, Delay Additional Tariffs on China

JM Ashby
Written by JM Ashby

Will Trump impose tariffs on an additional $300 billion in Chinese goods?

According to a report from Bloomberg, he will not.

Bloomberg reports that Trump will claim victory by simply resuming talks with China and will not impose the tariffs he's been promising for the past several months.

The decision, which is still under consideration, may be announced after a meeting between Presidents Donald Trump and Xi Jinping set for Saturday at a Group of 20 summit in Japan. A broad outline of the Trump-Xi agenda was discussed in a phone call Monday between U.S. Trade Representative Robert Lighthizer, and his counterpart in Beijing, Vice Premier Liu He.

People familiar with the American readout of the conversation characterized the call as productive. They said both sides discussed how they can present the resumption of trade talks to their domestic audiences as a win.

The U.S. won’t accept any further conditions on tariffs as part of reopening negotiations and no detailed trade deal is expected from the leaders’ summit, a senior administration official said Tuesday.

The key here is that we don't know how long Trump's tariffs will be delayed for and we don't know if he will change his mind prior to his meeting with Chinese President Xi Jinping or if he may change his mind during or after the meeting.

It will be good news if Trump does not impose additional tariffs because those tariffs would have severe economic consequences for everyone reading this, but even if he does not impose tariffs next week there's no guarantee he won't in the near future.

Chinese and American officials may resume talks, but there's no reason to think another round of talks will lead to a different outcome than previous talks did. China's defensive stance has only grown stronger in recent weeks and there's no sign that Trump is any closer to getting or even defining what he wants.

Trump also delayed his decision to raise tariffs on over $200 billion in Chinese goods from 10 to 25 percent early this year, but he eventually raised those tariffs on a whim months later.

I believe the best case scenario that we can hope for is that Trump's tariffs will be delayed until he's no longer willing to take such a risk as the 2020 campaign heats up. But even that will leave tariffs on about $250 billion in Chinese goods on the books for the foreseeable future. There will be no relief for American farmers who've already been blanketed by China's retaliatory tariffs; tariffs that will likely remain in place through 2019 and possibly even 2020.

  • muselet

    Although each side still wants to secure significant concessions from the other, both agreed to dial down the tit-for-tat responses and aim for a truce that could soothe financial markets while their sides resume negotiations, people familiar with the situation said. It’s not clear if they would set a definite timetable for the tariff cease-fire.

    As long as nobody does anything stupid, this may work itself out without destroying the world economy. That’s what passes for good news in the Age of Trump.

    I put the probability of Donald Trump doing something stupid somewhere around 0.6: not guaranteed, but certainly more likely than not.

    –alopecia