21 May 2018
World’s two leading economies suspend planned punitive tariffs after achieving ‘meaningful progress’ towards a new trade framework
The US and China are suspending planned punitive tariffs against one another after achieving “meaningful progress” towards a new trade framework.
The moves seem set to calm fears among some shippers and freight and logistics firms of a looming major trade war that would have significant implications for international supply chains, although logistics observers said there were many unanswered questions still.
Various international media channels reported that US Treasury Secretary Steven Mnuchin on Sunday revealed that the US and China would not impose the new tariffs announced earlier this year after positive meetings over the last few weeks.
The announcement followed talks in the US aimed at persuading China to buy an extra US$200 billion of US goods and services and thereby reduce the trade imbalance. The annual trade deficit stands at roughly US$375 billion, in China’s favour, but Washington is hoping to reduce it by $200 billion by 2020.
The White House is reportedly expecting to see a major increase in agricultural exports, amounting to between 35% and 40%. Mnuchin said the US would impose tariffs worth $150 billion if China did not implement the agreement, the BBC reported.
“We have made very meaningful progress and we agreed on a framework.” Mnuchin reportedly told Fox News. “We have agreed to put the tariffs on hold while we try to execute the framework.”
The announcement comes a day after Washington and Beijing announced that China would “significantly” increase purchases of US products as part of a deal aimed at reducing the trade deficit with China, German broadcaster Deutsche Welle reported.
Earlier this year, US President Donald Trump sparked concerns of a trade war when he threatened to impose around $150 billion worth of import tariffs on Chinese products, with Beijing responding with its own tariffs on American products.
A review of the trade imbalance launched last August by the US found a range of “unfair” practices by China, including restrictions on foreign ownership that pressured foreign companies into transferring technology, unfair terms on US companies, Chinese investments in US strategic industries and Chinese cyber-attacks.
Shippers and freight and logistics firms have expressed broad concerns about a looming potential major trade war that would have significant implications for international supply chains. Some logistics specialists have been advising shippers to order stocks in early this year as possible deadlines for new tariffs loomed.
Indeed, anecdotal reports suggest that air and ocean freight volumes have been boosted in recent months by shippers wishing to beat potential higher tariff costs later in the year.
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