United States Gives China One More Month To Agree To Trade Deal
After a week of growing tensions, the United States and China ended another round of trade discussions last Friday with no resolution. U.S. Treasury Secretary Steven Mnuchin told reporters that discussions with Chinese Vice Premier Liu He were “constructive,” but neither he nor U.S. Trade Representative Robert Lighthizer offered additional details, and Trump administration officials have not revealed when they will engage in discussions again.
As Connecting the Dots reported last week, talks between the two countries hit a snag in early May after Chinese officials reportedly walked back from some of the concessions they had made, including those addressing currency manipulation, competition policy and theft of U.S. intellectual property.
Friday’s meetings came just hours after the United States raised tariffs on $200 billion worth of products from 10 percent to 25 percent. (Click here to read the formal notice of the tariff increase.) The higher tariff rate applies to more than 5,700 import categories that arrived in U.S. ports after May 10 and that are exported from China on or after that date. The Office of the U.S. Trade Representative (USTR) announced that it would create a process allowing companies to seek product exclusions from these tariffs and will announce how that process will work later.
Chinese officials meanwhile, said they would retaliate, and on Monday announced that the country would raise tariffs on $60 billion in U.S. products starting on June 1. The tariffs will be imposed at the following levels:
- 25 percent tariffs on 2,493 items from current 10 percent;
- 20 percent tariffs on 1,078 items from current 10 percent;
- 10 percent tariffs on 974 items from current 5 percent;
- 5 percent tariffs to continue on 595 items.
Click here for a list of the products that will be affected by this announcements. (Auto parts remain exempt from tariffs.)
The Trump administration reportedly told Chinese officials that they have one month to finish negotiations, or the United States will impose tariffs on all products imported into the United States from China. (This warning did not match a social media post from the president himself. On Friday morning, President Trump said, “There is absolutely no need to rush.”)
Fastmarkets AMM (subscription required) explained how last week’s tariff increases will affect the metals industry. Section 301 penalties, which are on top of the Section 232 steel and aluminum tariffs, will increase from 10 percent to 25 percent for:
- Aluminum: Plates, rods, profiles, tubes, tanks, vats, wire, containers, powders, waste and scrap; unwrought lead, lead bullion, sheets, strip, foil, powders, flakes, bars, rods, profiles, wire, ores and concentrates; and zinc dust, powders, flakes, bars, rods, profiles, wire, plates, sheet, strip, foil, tubes and pipes.
- Steel: iron ores and concentrates; iron and steel manufacturing slag sand, waste, scrap, remelting scrap ingots, granules, powders (including of alloy steel), shapes, sections, tubes, pipes and hollow profiles (and associated fittings, such as flanges, sleeves, elbows and bends; products, including doors, windows, reservoirs, tanks, vats, cans, containers, baths, grinding balls, wire, ropes, cables, fencing, netting, woven cloth and chain.
- Copper: Products like wire bars, billets, profiles (including hollow profiles), bars, rods wire and cables, cathodes, plates, sheet, strip, foil, tubes, pipes, and more; copper powders, waste and scrap; ash and other residues left from copper manufacturing; copper alloys, including copper-zinc, copper-tin base alloys, copper master alloys, brass profiles, bars, rods, tubes and pipes, plus bronze plates, sheet and strip.
- Nickel: mattes, alloys, powders, flakes, bars, rods, foil, plates, sheets, strip, wire, ores, concentrates, waste and scrap, nickel alloy plates, sheet and strip.
Small items including aluminum, iron, steel and copper nails, tacks and drawing pins; copper rivets, screws, washers, chains and springs and tin household items also are included.