‘Plenty of Time’ to Decide on Dec. 15 Tariffs Amid ‘Phase One’ Trade Deal, USTR Says
Details remain vague about the “very substantial phase one” trade deal President Donald Trump announced at the White House Oct. 11 with China's Vice Premier Liu He that persuaded the president to delay hiking three rounds of Section 301 tariffs to 30 percent (see 1910110038). Trump “approved” the delay at Liu's request, “while we go through a process of documenting” phase one and putting the agreement on paper, Treasury Secretary Steven Mnuchin said.
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"There is a lot of work to be done on that front," Mnuchin said on CNBC on Oct. 14, referring to getting the documentation done. He said the agreement will affect structural issues in agriculture, financial services market opening, ag purchases and intellectual property protections. He said the U.S. expects at least $40 billion in purchases.
With the immediate threat of a tariff increase removed for now, the next looming concern is the fate of the 15 percent List 4B tariffs set for Dec. 15 on a slew of consumer goods, including smartphones, laptops, tablets and other tech products. Trump “has not made a final decision on that, but there’s plenty of time to make that decision,” U.S. Trade Representative Robert Lighthizer said.
Mnuchin said that if there's no deal during the Asia-Pacific Economic Cooperation summit mid-November in Santiago, Chile, December tariffs should go in place, but said, "I expect we'll have a deal." He said negotiators will likely go to China before the meeting between the presidents in Chile.
The administration’s posture didn’t sit well Oct. 11 with the Consumer Technology Association, which complained that U.S. businesses “will continue to struggle under the burden of tariffs and uncertainty in supply chains.” The American Apparel and Footwear Association remains similarly concerned about the tariffs that are still in place, it said in a news release. Footwear Distributors and Retailers of America President Matt Priest said in an emailed statement that "the tariffs have already raised consumer costs and prevented shoe companies from growing" and that "one step forward when we’ve taken three steps back on trade policy isn’t a real win for American shoe companies."
Phase two negotiations will start “almost immediately after we’ve concluded phase one and papered it,” Trump said. “There may be a phase three or we may get it done in phase two.” The aim is to complete the phase one paperwork in three to five weeks, he said. The ultimate goal is a comprehensive trade agreement that's ready for him and Chinese President Xi Jinping to sign at a ceremony during the APEC summit, he said.
That the phase one deal lacks teeth until it’s documented on paper was apparent Friday in the administration's refusal to commit to delisting China as a currency manipulator. Trump said the two sides came “to conclusion” on a currency and foreign exchange package. Their agreement includes “transparency into the foreign exchange markets,” and “so we’re very pleased with that,” Mnuchin said. Yet Treasury's Aug. 5 declaration of China as a currency manipulator remains in force, the secretary said: "We’ll be making a decision on that and evaluating it.”
There’s “a lot of agreement” in phase one on intellectual property theft protection, “but we’ll have some of that included in phase two,” Trump said, again lacking specifics. “We’ve also made very good progress on technology transfer, and we’ll put some of technology transfer in phase one.”
Senate Finance Committee Chairman Chuck Grassley, R-Iowa, said Oct. 15 that the progress announced "gives me hope we can turn this partial deal into a full deal down the road, but I don’t think that’s going to be an easy process."
Grassley, who was speaking to reporters on a conference call, said he wants more details on the agricultural aspects of the phase one deal, and he also wants to learn "how definitive and certain it is." He said phase one does not go as far as he wants, and there need to be changes to Chinese law, comprehensive changes to forced technology transfer and intellectual property protections, and a change to how China subsidizes its industries.