The administration announced Tuesday that a new 10 percent import duty on cellphones, laptops and many other consumers goods made in China will be delayed until Dec. 15, instead of taking effect on Sept. 1 as President Donald Trump originally said.
The delayed items — which also include video game consoles, toys, computer monitors and certain footwear and clothing — account for more than half of the $300 billion worth of Chinese imports that Trump said on Aug. 1 that he would be hitting with a 10 percent duty.
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The action lessens the possibility that highly sought consumer goods that U.S. companies import from China will be hit with a “Trump tax” during the crucial holiday shopping period.
“We’re doing this for Christmas season, just in case some of the tariffs would have an impact on U.S. customers, which, so far, they’ve had virtually none,” Trump told reporters Tuesday before heading to an energy policy event in Pennsylvania. “The only impact has been that we’ve collected almost $60 billion from China — compliments of China.”
Trump has repeatedly claimed that China bears the cost of the duties, even though they are actually paid by American companies that import the goods. Many analysts view the postponement of the duties as a tacit admission by the White House of that economic reality, as well as a politically expedient decision.
“It’s worth noting that the delay pretty clearly contradicts his assertion that the Chinese are paying the tariffs,” Bill Reinsch, a trade policy expert at the Center for Strategic and International Studies, said in an email. “If they’re paying, why are we postponing? Answer: he doesn’t want to be the Grinch that stole Christmas.”
The move “also allows for the possibility of reaching a settlement with China over the next few months and avoiding the tariffs altogether,” said John Frisbie, managing director at the international consulting firm Hills & Co. and the past president of the U.S.-China Business Council.
Markets surged on the news. The Dow Jones Industrial Average jumped as much as 500 points in morning trading before ending the day up about 370 points. The broader Standard & Poor’s 500 index was up 2 percent before closing 1.5 percent higher.
Separately, the Chinese state-run People’s Daily reported that Chinese Vice Premier Liu He had spoken by phone with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, in what appears to have been their first conversation since a meeting two weeks ago in Shanghai.
“We had a very good talk yesterday with China,” Trump said, confirming the call. “A very, very productive call. I think they want to do something. I think they’d like to do something dramatic. I was not sure whether or not they wanted to wait until a Democrat has a chance to get in.”
He again asserted that China “would really like to make a deal,” even though the two sides have not yet come to an agreement in the on-again, off-again negotiations dating to the early days of his administration in 2017.
Sen. Ron Wyden (D-Ore.) accused Trump of pursuing his trade war without any real goal other than his own self-aggrandizement.
“Today’s announcement is more proof that Trump’s tariffs have always been about getting the headlines he wants,” Wyden said. “Postponing tariffs on video game consoles and pet toys is giving Trump the stock market bump he wants, but he’s still going ahead with tariffs on books, school supplies and clothes that will hit working Americans the hardest.”
The list of Chinese goods that still will be hit with 10 percent duties on Sept. 1 is still quite extensive. It includes beef, pork and many other food and agricultural items.
Also included are several clothing products including coats, suits and nightwear, and various big-ticket consumer items including jewelry, clothes dryers, ovens and stoves, color TVs, motorcycles and rifles. Industrial goods subject to the tariffs in just a few weeks include iron and steel products, brewery machinery, textile equipment and cash registers.
In addition, Trump has already imposed a 25 percent duty on $250 billion worth of Chinese goods, but those are primarily raw materials and intermediate goods used by manufacturers.
“Unfortunately, today’s announcement doesn’t address the vast majority of tariffs that are driving uncertainty, putting farmers out of business and causing small businesses to slow hiring,” Tariffs Hurt the Heartland, a business coalition opposed to the tariffs, said in a statement. “Instead of picking temporary winners and losers and holding the U.S. economy hostage, it is time to reach an agreement that finally puts an end to the trade war.”
Based on two lists that USTR published, the anti-tariff group estimated that duties on approximately $112 billion worth of imports will still take effect on Sept. 1, including on about $25.6 billion worth of clothes and $7.3 billion of footwear.
The duties delayed until Dec. 15 cover $160 billion worth of imports, including about $45 billion worth of cellphones, $39 billion of laptops and tablets, $5.3 billion of video game consoles, $4.6 billion of monitors, $2.3 billion worth of clothes and $6.7 billion of footwear, the group said.
Trump’s sudden decision to delay a sizable portion of his Sept. 1 tariff increase indicates the “adults in the room” prevailed after the president’s impulsive decision to raise taxes on hundreds of billions of dollars of consumer goods ahead of the holiday season, said Ted Bauman, a senior research analyst and economist at Banyan Hill Publishing.
“Even from the perspective of political self-interest, Trump’s tariffs threat was suicidal. It has caused chaos in the stock market, a drop in business confidence and investment, and every forecast says the global economy is on the verge of a downturn,” Bauman said.
That point was underscored by Phil Levy, who served on the White House Council of Economic Advisers during the George W. Bush administration.
“Once Upon A Time, there was something called a ‘Policy Process,’ in which the ramifications of policies were considered BEFORE the policies were publicly Tweeted,” Levy wrote on Twitter.
The USTR office also announced on Tuesday that “certain products are being removed from the tariff list based on health, safety, national security and other factors and will not face additional tariffs of 10 percent.”
About 25 tariff lines were removed, covering items such as car seats, shipping containers, loading cranes, certain fish, Bibles and other religious literature, a USTR spokesman said.
Retailers welcomed the decision to delay some duties, but also called for a deal to end the U.S.-China trade war and more than a year of uncertainty caused by Trump’s tariffs and chaotic negotiating style.
“We urge the administration to use this time to reach a trade resolution with China before the Dec. 15 deadline hits and new taxes hit everyday consumer products and family budgets,” Hun Quach, vice president of international trade for the Retail Industry Leaders Association, said in a statement.
Shoe importers echoed that point, noting the United States already had duties as high as 67.5 percent on some footwear before Trump began his trade war.
“It is no coincidence that the administration is allowing certain shoes to come in without raising taxes in hopes that prices do not rise at retail during the holiday,” added Matt Priest, president and CEO of Footwear Retailers and Distributors of America. “While we are pleased with the decision to delay new tariffs on certain shoes, we are not satisfied.”