The Week Ahead: US-China Trade Tensions Remain Front and Center

Date: Friday, September 27, 2019
Source: Sourcing Journal

What new trade developments occur next week remain to be seen, but right now the U.S. and China seem to be on course for another round of trade talks.

And while the two countries have exchanged fighting words over the course of the protracted dispute, both the U.S. and China have taken steps to de-escalate the combative nature of their ongoing clash over trade.

Earlier this week, word surfaced that Chinese Vice Premier Liu He will be part of the delegation from China that will meet with their U.S. counterparts–U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin– in Washington on Oct. 10 as the two countries rekindle trade talks.

China also decided to buy U.S. soybeans and pork as U.S. President Trump agreed to delay until Oct. 15 the 5 percent tariff increase on $250 billion in Chinese imports that were already taxed at 25 percent, for a 30 percent tariff total.

The increase was set to go up on Oct. 1, but that was before a decision was made on the date for the new high-level trade meeting. Ministry of Commerce spokesperson Gao Feng said the purchase of American farm goods will be exempt from Chinese tariffs.

Trump inked a limited trade deal with Japan this week, after which he said on Wednesday that a deal with China “could happen sooner than you think.” Yet the U.S. is also said to be considering a restriction of American investments in Chinese companies. The 15-month-old trade war has been marked by halting developments best described as “one step forward, and two steps back.”

Trump might have a new incentive to resolve at least one political issue, and not just because of his re-election campaign seeking a second term.

On Tuesday, House Speaker Nancy Pelosi launched a formal impeachment probe into alleged violations of the law connected to allegations that Trump asked the Ukraine president to investigate former Vice President Joe Biden, a potential political rival in his re-election campaign, and his son, Hunter Biden.

While there’s no guarantee that a trade agreement will be reached, fashion brands and retailers are certainly hoping for a deal that would ends months of uncertainty, threats and speculation.

At present, many aren’t sure how to plan for their businesses in 2020. Some brands have said they believe that if the trade battle continues, the added costs will ultimately have to be born by consumers. And a holiday survey by AlixPartners indicated that many consumers don’t want to pay higher prices stemming from tariff increases.

 

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