Before the ink was dry on yesterday's News Alert regarding the back and forth pronouncements between China and the U.S. plans for increasing import tariffs more rumblings were heard. As the world's two largest economies traded volleys it was China's turn to to respond to the U.S. Trade Representative's plans to review 1300 tariff items for possible duty increases.
In response China yesterday announced its intention to impose 25% tariffs on 106 additional items (on top of the 128 items mentioned previously) imported from the U.S. worth approximately $50 billion, matching the amount target by the U.S. list of products under review. This latest expansion of Chinese plans included U.S. soybeans for which China is the largest market for this staple of U.S. agriculture exports. Other products include corn, wheat, cotton products, beef, whiskey and a number of chemicals and chemical-related products, including plastics.
Unfortunately the rhetoric which has accompanied these announcements has also increased in pitch. There are real issues that need to be and should be addressed and many experts are concerned that these draconian tariff measures are potentially creating more problems than solving anything. In the last two weeks we are seeing much more retaliation then negotiation, at least between China and the U.S.
The good news is that both countries have left some room to extract themselves from the announced "intentions" to impose these tariffs. The U.S. Trade Representative is conducting a review of 1300 products under consideration for increased tariffs and is allowing for public comment. Interested parties are encouraged to do so through the Federal eRulemaking Portal at www.regulations.gov. China has also not announced complete plans for implementing their intention and seems to be waiting for final decisions from the U.S.
There is still ample opportunity for cooler heads to prevail on both sides. There is much concern that the impact of these announced intentions will not achieve the stated goals but could very well cause real damage to many businesses and workers. Industry needs to make its voice heard since it will be much easier, and more productive, to stop or minimize the damage from a trade war before it really gets started, then to try to reverse actions after they have been taken.
We will continue to keep you informed on this important issue and welcome any feedback or information you can provide to help inform us about specific situations related to this matter which could affect your business.