This commentary appeared in the print edition of the Jan. 6, 2020, Journal of Commerce Annual Review and Outlook.
The US–China trade war has been a badge of honor for President Trump and his most protectionist advisors. After all, isn’t it the Chinese who are paying the increased tariffs, not US importers? And the United States has collected billions in additional revenue at no cost to US companies. These and other fictions are the greatest selling points the current administration has fed to the public. While there is no question that China’s unfair trade practices regarding intellectual property theft and forced technology transfer are the principal targets of the Section 301 tariffs, what can be anticipated in terms of a resolution of this ever-escalating trade war as we head into an election year and likely the impeachment of the president by the House of Representatives?
As of this writing in early December 2019, we know that the US and the Chinese have reportedly reached a minimum “phase one” trade deal that would include some or all of the following measures:
- A “rollback” of some existing tariffs yet to be announced and an agreement to forestall additional tariffs scheduled for Dec. 15 on toys, consumer electronic goods, and apparel;
- A Chinese agreement to make massive new US agricultural purchases.
While the president is feeling enormous pressure from agricultural interests who are continuing to suffer from the trade war, hardliners are concerned that giving up tariffs in the absence of any deal that does not fundamentally address the original issues of IP theft and forced technology transfer will be seen as a missed opportunity.
All we can predict with this administration is that, until the formal announcement is issued with details, everything is subject to change.
Meanwhile, the steady influx of individual petitions to exclude specific products from the current tariffs on “List 4A” (effective Sept. 1, 2019) proceeds apace, and importers should not put the brakes on those requests in order to be able to recoup tariffs already paid.