Chinese officials are likely weighing up potential responses to a series of mixed signals from the US, where officials have been touting progress in the phase one trade agreement, while at the same time reinstating tariffs on Chinese products, risking a hard-fought easing in bilateral trade tensions, a Chinese trade expert who advises the government told the Global Times on Wednesday.
Starting Wednesday, the US will collect a 25 percent tariff on certain Chinese products after a previous exemption expired and the US Trade Representative’s (USTR) office did not extend the exemption on those goods, according to a recent notice from the USTR.
In the notice, the USTR said it would extend tariff exemptions for 11 categories of products – part of $34 billion worth of Chinese goods targeted by a 25 percent US tariff imposed in July 2018 – for another year, but left out 22 categories of products, including breast pumps and water filters, according to a comparison of the lists by the Global Times.
That means those products will face a 25 percent tariff starting on Wednesday.
“This is not in line with the consensus reached by China and the US during the phase one trade negotiations that the two countries will gradually remove tariffs but not raise them,” said Gao Lingyun, an expert at the Chinese Academy of Social Sciences, noting that the move “is certainly not good for the recently thawing trade relationship.”
In addition, the US on Tuesday decided to slap anti-dumping and anti-subsidy duties on up to 262.2 percent and 293.5 percent, respectively, on Chinese wood cabinets and vanities imports, Reuters reported on Wednesday.
More puzzling is the motive behind such a move against the backdrop of the phase one agreement and its implementation, which has been praised by US officials, Gao said.
“China will weigh up the possible motives and see how to respond. If this is just a technical issue, then it shouldn’t be a big problem. If this is part of strategy to take a swipe at China, it will not go anywhere,” he said, noting that it would be “very easy” for China to respond.
US officials have been under growing pressure from US businesses and lawmakers to suspend the tariffs to help the economy.
Last week, more than 100 US trade groups wrote a letter to President Donald Trump, urging him to drop the tariffs and arguing such a move could offer a boost of $75 billion to the US economy.
US officials, particularly China-hawks such as White House trade adviser Peter Navarro, have resisted the calls and instead have been highlighting the progress of the phase one trade agreement.
In a statement on Tuesday, the US Department of Agriculture and the USTR listed five areas of progress in China’s implementation of the phase one trade agreement, including China’s decision to exempt more US products such as agricultural goods from tariffs.
“We are working with China on a daily basis as we implement the phase one trade agreement,” USTR chief Robert Lighthizer said in the statement. “We recognize China’s efforts to stick to their commitments in the agreement and look forward to continuing our work together on trade matters.”
Gao said that China remains committed to implementing the phase one deal, despite the coronavirus epidemic that has seriously affected economic activities both in China and abroad, but the US should also focus on easing tensions with China and not raising them.
“If they continue on a wrong path, we could return to where we were during the trade war,” he said.
Even as China’s trade dropped significantly in the first two months of the year, its soybean imports from the US jumped sixfold year-on-year to 6.101 million tons, according to Reuters on Wednesday.
Also, Chinese companies have resumed importing US liquefied petroleum gas after Chinese officials exempted it from tariffs, Reuters reported, citing industry sources.