Trade Wars Are Easy: Part 100

Fasten your seatbelts, because today’s trade update is a doozy.

As you likely already know, in mid-August the Trump administration announced its intent to move forward with tariffs on the remaining goods imported from China, collectively known as List 4. The Office of the United States Trade Representative confirmed the List 4 tariffs in an August 20 Federal Register notice, later delaying implementation on some goods for the Christmas season.

CHINA RETALIATES ON LIST 4
In the wake of that announcement, on August 23, China released a list of escalating tariffs on $75 billion worth of U.S. exports in retaliation. The Chinese list has been divided into two parts, Annex 1 and Annex 2, and includes over 5,000 U.S. imports that already face tariffs. China will also reinstitute tariffs on U.S. auto and auto part imports.

Like the United States’ List 4, China’s tariffs are divided into two parts that will take effect on different dates. China’s tariffs will range from 5 percent to 10 percent and will begin for the first group of American exports that are imported into China on or after September 1. The second group of American exports will face tariffs effective December 15.

PRESIDENT TRUMP RETALIATES ON THE RETALIATION
Responding to the response, President Trump turned to Twitter to proclaim:

“Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing…your companies HOME and making your products in the USA.”

In response, the Dow plummeted as folks tried to make sense of the series of orders and escalations. On Sunday Trump then softened this threat, saying he would only consider it if China again raised tariffs on American goods. 

Following the statements, that Friday evening President Trump then announced two major tariff increases, again via Twitter. First, any imports from China currently subject to the “section 301” 25 percent tariff will increase to 30 percent on October 1, 2019. This includes all products on Lists 1, 2, and 3. Second, imports on List 4A, scheduled for a 10 percent tariff on September 1, will now be taxed at 15 percent. Expect a similar increase for List 4B. USTR has released a prepublication document confirming this increase, which is scheduled to be published in the Federal Register on August 30.

GOOD FEELINGS AT G7?
Following the tumultuous afternoon, President Trump was off for the Group of Seven summit, being held in France. While he initially expressed what many interpreted as regret at the escalating trade fight, the White House later issued a statement saying that Trump only “regrets not raising the tariffs higher.”

On Monday morning, President Trump claimed that his trade negotiators had received two “very good calls” from China, though a spokesman for China’s foreign ministry denied any knowledge of these calls.  Trump also claimed that China now wants to come back to the table and make a deal, saying that the two sides will “begin talking very seriously” and that the Chinese “mean business.” The Chinese continue to insist that these claims are untrue.

Despite this rapid escalation, talks between China and the United States are still expected in September. As of this writing, dates have not been set. But do not expect China to offer any concessions in September—the 70th anniversary of the communist party falls on October 1 and the country is celebrating “China’s rejuvenation after a period of foreign dominance.”

DON’T FORGET TO SUBMIT YOUR LIST 3 EXCLUSION REQUESTS!
As a reminder, the exclusion process for List 3 is still open. Requests for exclusions must be submitted by September 30. The RV Industry Association is happy to file letters in support of any member exclusion requests and has done so at the request of several members. If you would like the Association to file a letter on your behalf, contact Samantha Rocci at srocci@rvia.org.