US To Extend Tariff Exclusions On $34B China Imports As Trade Talks Continue

The Trump administration may extend tariff exclusions on $34 billion worth imports from China amidst the ongoing trade talks to end the protracted U.S China trade war.

According to the latest news from the Office of the U.S. Trade Representative, nearly 1,000 products were exempted from the July 2018 tariff and those exclusions are set to expire on Dec. 28.

The renewed extension of tariff exclusions will offer relief to companies importing those products.

In a similar gesture, China said in September that it may exclude many American farm goods, including soybeans from tariffs. The USTR updated last week that China and the U.S. are close to finalizing a phase one trade deal.

Per Trump news, President Donald Trump has confirmed the interim trade deal will cover intellectual property issues, financial services and involve a commitment by China to buy $40 billion to $50 billion worth American agricultural products.

Main ingredients of the trade deal

Reports say that the U.S. and China are close to finalizing the “phase one” deal and will be signed by President Trump and President of China Xi Jinping on the sidelines of the Asia-Pacific Economic Cooperation summit in Chile on Nov. 16-17.

In that context, a Bloomberg report takes a look at the deal and sees what might be in what will be left out in phase 1 deal.

Among the probable mini deals will be a pause in the tariff escalation, although no full stop is assured. Trump on Oct. 15 agreed not to hike tariff to 30 percent from 25 percent on $250 billion of imports from China. But the 25 percent tariffs still prevail.

But the 15 percent tariff on $110 billion in goods from Sept. 1 will stay and also the threat of tariffs on another $160 billion in goods from Dec. 15 will remain.

But the expectation is that the Dec. 15 tariffs that may hurt consumer items like smartphones and toys will not take effect. Still, a lot of tariffs remain.

The “Section 301” fight of the U.S. against China to end the alleged systematic and state-backed Chinese theft of American intellectual property will feature in the interim deal.

There will be commitments from China. Per China news, the Asian country has already taken steps such as new IP and foreign investment laws to address the issue, earlier this year and set up new IP courts to prosecute cases. But the key is whether Chinese authorities will enforce the laws.

Both the U.S. and China will refrain from manipulating currency markets via abuse of the currency exchange rate for economic gains.

The bilateral commitment will make the U.S. lift the “currency manipulator” label slapped on China.

China, already buying U.S. soybeans and American pork in large quantities will be encouraged to double the intake. But indications are that China will stay at levels before the trade war. Even that is convenient for both the U.S. and China.

There will be a trade dispute resolution mechanism. That is another friendly way to make sure that China lives up to the promises made.

However, the major point missing from the deal will be any breaks for Huawei that is hurt by the U.S. blacklisting. White House says those decisions will not form a trade agreement, Rather, it will move on a separate track.