Movement On U.S., China Trade Dispute Brings Cautious Reception

On Friday, President Trump announced that the U.S. and China had reached a “very substantial phase one deal” in the two countries’ ongoing trade dispute. In the deal, the U.S. suspended a tariff increase on $300 billion in Chinese imports, which was set to go into effect today, and China agreed to purchase $50 billion in American farm exports.

Questions remain about the agreement, and reports are that China wants further negotiations before signing it. The China Daily, the official state-owned English-language newspaper, noted, “While the negotiations do appear to have produced a fundamental understanding on the key issues and the broader benefits of friendly relations, the champagne should probably be kept on ice, at least until the two presidents put pen to paper.” However, activity on the negotiations have been positively, if cautiously, welcomed.

Jonathan Gold, spokesperson for Americans For Free Trade, a coalition of more than 150 associations—including PPAI—that are united in the fight against tariffs, said in a statement, “The progress made today is a positive step forward, and we are encouraged by the president delaying the anticipated tariff increase in October. We hope the news today demonstrates a renewed focus on ending the trade war and removing all tariffs. However, until tariffs are completely repealed, American businesses, farmers and consumers—not China—will continue paying the price of this trade war. We strongly encourage the Trump Administration to continue negotiating with China and come to a final deal that removes all tariffs as quickly as possible.”

The promotional products industry, which has kept a keen eye on the trade negotiations and tariff escalations since they began, is largely taking a wait-and-see approach with this latest announcement.

“For us, the ‘nth‘ iteration of progress in the talks regarding U.S. tariffs, such as escalations temporarily on hold and China buying more from farmers, is just not making an impact at all in our strategy,” says Alan Tabasky, vice president and general manager of supplier BEL USA. “And strategy is what you have to keep in mind. Short-term movement and corrections, ad-hoc changes based on tweets have only proved time-consuming at best. We are continuing along with our overall merchandising and importing strategy regardless of the headlines. Hopefully there will be real progress but for now, the latest news did not make an impact on our plans.”

Larry Whitney, director of global compliance at supplier Polyconcept North America, says, “We are delighted that the president did not implement the 30-percent tariff on Section 301 list three today. That said, we are dismayed that there is still a 25-percent tariff on lists one, two and three, and a 15-percent tariff on List Four(a), as well as the looming December 15 imposition of a 15-percent tariff on List Four(b).”

Whitney adds, “As for the future outlook for the U.S. and China ‘s trade talks, I think that it remains to be seen what will happen. Can China and the U.S. actually produce the Phase I agreement document, and sign it in the next few weeks? If they do, it’s a sign that the countries can find some agreement on our differences. Based on past behavior by both sides, I am not optimistic. Personally, I think that the U.S. will use the List Four(b) tariffs and a possible increase to a 30 percent or higher tariff as a fallback threat, and that we will likely see both implemented at some point in the next year. To take a long-term view, China is not going to vanish as the factory to the world any time soon. Supply chain diversification is needed, however, to mitigate the impacts of these trade disruptions moving forward.”

Paul Lage, MAS, president of IMAGEN Brands, says he’s also in a wait-and-see mode. “We have been through this situation many times regarding tariffs. Most times when we plan and try to communicate early, the message changes. Therefore, we spend more time evaluating our situation and we try to be nimble to this ever-changing direction from the government. We have tried to beef up our inventories so that we can provide ourselves and our customers with as much cushion as possible. We also try to give at least 30 days’ notice when prices might change. Our goal is to keep prices as competitive as possible, which requires us to be more reactive than proactive in this environment.”

At present, the trade deal announced Friday exists only in principle. The Associated Press reports that no documents have been signed and many details remain to be worked out. And plans to impose further tariffs on December 15 on an additional $160 billion in Chinese products remain in place.

filed under October 2015 | Tariffs
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