US, China Reach Partial Trade Deal; Avoid Tariff Increase

The U.S. and China On Friday agreed on the outlines of a partial trade accord. In exchange, the U.S. agreed to suspend a tariff increase on at least $250 billion in Chinese goods to 30 percent from 25 percent set for Tuesday.

The agreement marked the first tangible achievement in their 18-month trade war.

As part of the “Phase One” deal, China will purchase $40 billion to $50 billion in U.S. farm products, according to President Donald Trump. Negotiators had also reportedly agreed on unspecified intellectual-property measures and concessions related to financial services and currency. In exchange, the U.S. will delay the tariff increase due Tuesday as the deal is finalized.

A tariff hike implemented in September was not rolled back and plans for another hike just before the Christmas holiday on December 15 remain in place. Trump has yet to decide whether to proceed with another planned tariff increase December 15, which would impact popular consumer goods.

The “Phase 1” agreement was the first phase of a broader agreement. “It’s such a big deal that doing it in sections, in phases, is really better,” Trump said during a White House meeting with Liu He, China’s vice premier. “So you’ll either have two phases or three phases.”

Several issues left to resolve include accusations of intellectual-property theft, forced technology transfer and complaints about Chinese industrial subsidies. The “Phase 1” agreement is expected to take several weeks to write but both sides could officially sign by November.

The news was well-received by industry stakeholders, who were sure to temper their optimism.

“Today’s announcement is a positive step towards avoiding the unnecessary tariffs and the ensuing financial burden and uncertainties that will be felt throughout our industry,” said Nick Sargent, president, Snowsports Industries America. “But it’s just a pause. With the winter season almost upon us, I hope that today creates the momentum we need to finally end this trade war by removing all the tariffs, and letting all of us get back to growing our businesses.”

Patricia Rojas-Ungar, vice president of government affairs for Outdoor Industry Association, said, “The announcement of the first phase of a trade deal between the U.S. and China brings the outdoor industry a Halloween season treat and is a positive and necessary step forward, particularly if it delays tariff increases set to go into effect this month and new tariffs set to start in December on outdoor products. We urge the Administration to let this agreement serve as the beginning of the end of the trade war that for months has been wreaking havoc on American outdoor industry businesses, jobs and consumers. Now is the time to conclude a comprehensive deal with China that immediately lifts all punitive tariffs.”

Tom Cove, president and CEO, Sports & Fitness Industry Association, added, “SFIA looks forward to seeing the final agreement in writing to glean a greater understanding of the current trade situation. In the interim, we are hopeful that both sides will continue to communicate and work in good faith toward a resolution to this tariff war.”

“While we welcome the President’s decision to withhold an additional tariff increase on many of our products, the reality is that everything currently being hit with punitive tariffs is still being charged,” said Rick Helfenbein, president and CEO of the American Apparel & Footwear Association. “This means Americans are still being burdened with an additional 25 percent on backpacks, handbags, luggage, hats, and gloves. It also means that 92 percent of our clothing, 53 percent of our shoes, and 68 percent of our home textiles imported from China continue to be charged an additional 15 percent tariff. These rates are on top of the hefty tariffs already being charged on these products.

“As we have said throughout this trade war, we do not believe continuing to tax Americans gives us leverage at the negotiating table with China, and it is past time that these misguided tariffs were removed. The continued costs and uncertainties associated with this tariff policy mean the Grinch still has stolen our Christmas.”

The National Retail Federation (NRF)’s Senior Vice President for Government Relations David French said, “Retailers are encouraged by the progress made between the United States and China and are pleased that the administration has listened to the concerns of the business community as the trade war takes an increasing toll on the American economy. The decision to delay planned tariff hikes is welcome news to U.S. retailers and consumers heading into the busy holiday shopping season. Although this is a step in the right direction, the uncertainty continues. We urge both sides to stay at the negotiating table with the goal of lifting all tariffs and fundamentally resetting U.S.-China trade relations.”

Jennifer Safavian, executive vice president of government affairs at Retail Industry Leaders Association (RILA), said, “Suspending the Oct. 15 tariff increase is welcomed news for retailers, consumers and the global economy. The administration knows that the trade war and specifically the harmful tariffs are weakening the U.S. economy, hurting manufactures and causing consumers to pay more for everyday items like shoes, sweaters and sporting equipment.

“Relief from the anticipated tariff increase is appreciated, but only a long-term agreement will alleviate the uncertainty inflicted by the trade war. We are encouraged by the reported productive tone of the US-China talks and will continue to press the administration for a comprehensive trade deal that ends the tariffs on all product lines.”