Trump Delays Tariffs on China in Sign of Possible Warming Relations
Late on Sunday, the 24th of February, United States President Donald Trump postponed the enactment of increased tariffs against Chinese imports. The action comes as an important signal that the two countries are working hard to negotiate a compromise and prevent a trade war. World markets jumped in response to the delay, providing hope for many that the damaging economic effects of new tariffs may be prevented.
The tariffs that the President delayed were set to be imposed upon 200 Billion Dollars of Chinese imports beginning on Monday. The import duties on these goods were also set to rise from the current rate of 10% to 25%, which would have had catastrophic impacts on the Chinese economy. Had the United States implemented these damaging measures, China would have levied an equally damaging set of tariffs on American products, from bacon to steel.
Markets around the world rose in response to the temporary reprieve provided by the President, especially in Asia. The Shanghai Composite Index rose by a record high 5.6% on Monday, while U.S. markets also rose by smaller margins. Evidencing what analyst broker Jeffrey Halley called a “collective sigh of relief” by the world financial communities.
The President first broke the news of the postponement on twitter, where he declared that, “the U.S. has made substantial progress in our trade talks with China” and, “assuming both sides make additional progress, we will be planning a Summit for President Xi and myself, at Mar-a-Lago, to conclude an agreement.”
The announcement came as some of the first news regarding the fevered negotiations that have been occurring between the American and Chinese governments on the topic of trade. The White House has been quiet about the discussions, releasing only limited information about the successes of the current talks, including progress on the protections for American businesses in China and an agreement on preventing currency manipulation.
However, despite President Trump’s optimistic prediction, a deal between the two nations is far from set. The greatest impasse to an agreement, the stealing of American intellectual property rights by Chinese firms, has yet to be resolved by negotiations. As Chinese property theft has been one of the main grievances of President Trump, and originally helped to spark his imposition of these punishing tariffs, it is unlikely he will sign any deal that does not include meaningful action on this topic.
Many experts believe that this seeming progress in preventing a trade war may only be delaying the inevitable. China, though offering concessions at times, has been unwilling to change the main issue between American-Chinese economic relations, the promotion of the massive trade deficit. This should come as no surprise, as the imbalance of trade with the United States has long been a boon for China, and something they will likely be very unwilling to let go of.
Only time will tell if an all-out economic Armageddon will occur between the worlds two most powerful markets. However, for the time being, it seems as though President Trump and Premier Xi have found some common ground, and that meaningful progress can be achieved.