At the close of April, it looked like the US and China were well on their way to establishing a trade deal that would be mutually beneficial and remove many of the punitive tariffs that had been put in place. But negotiations fell through, with each side pointing fingers, and tariffs have officially been escalated by both the US and China.
After the breakdown in talks, President Trump announced last week that the third list of Chinese products that had been subject to a 10% duty would be increased to a 25% duty effective immediately. This means that about half of everything that the United States imports from China is now subject to an additional 25% duty, which will result in billions of duties being paid to Customs.
Shortly thereafter, the Chinese government announced that they would be putting additional tariffs of up to 25% on about $60 billion worth of products China imports from the USA. While the trade imbalance necessarily means that there’s less for China to target for duties, the targeted duty raises can cause a lot of pain for US producers.
The largest sector that China imports from the US is farm products, and this current tariff raise targets the same as before. Farmers have been bearing the brunt of the effects of the trade war thus far, as China is a lucrative market for a lot of major commodities like soy. The tariffs into China won’t go into effect until June 1st, and so the full list of what China will add duties to is not available yet.
President Trump is also holding the option of adding the 25% to the remaining untaxed $325 billion of imports from China, but as of yet has not made a decision.
Upon the announcement that the trade war would escalate, the stock market saw a major fallout. Dropping almost 700 points on Monday the 13th, concerns over a global escalation of a trade war caused many stocks to lose considerably value. But as negotiations continue, we’ve seen wild swings on positive news of this kind before. However through the trade negotiations, the US economy has consistently seen growth and a reduction in unemployment, indications the economy remains healthy.
If you’d like to discuss how this new line of tariffs will affect your business or how duty drawback can help mitigate its effects, please contact our VP of Sales Andrew Galloway at agalloway@jmrodgers.com or 973-726-5340.
