‘Plenty of Time’ to Decide on Dec. 15 Tariffs Amid ‘Phase 1’ Trade Deal, Says USTR
Details remain vague about the “very substantial phase 1” trade deal President Donald Trump announced Friday at the White House with Chinese Vice Premier Liu He that persuaded the president to delay hiking three rounds of Section 301 tariffs to 30 percent Tuesday. Trump “approved” the delay at Liu's request, “while we go through a process of documenting” phase 1 and putting the agreement on paper, said Treasury Secretary Steven Mnuchin.
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With the immediate threat of a tariff increase removed for now, the next looming concern is the fate of the 15 percent List 4B tariffs set for Dec. 15 on a slew of consumer goods, including smartphones, laptops, tablets and other tech products. Trump “has not made a final decision on that, but there’s plenty of time to make that decision,” said U.S. Trade Representative Robert Lighthizer. But CTA complained Friday that U.S. businesses “will continue to struggle under the burden of tariffs and uncertainty in supply chains.”
Phase 2 negotiations will start “almost immediately after we’ve concluded phase 1 and papered it,” said Trump. “There may be a phase 3 or we may get it done in phase 2.” The aim is to complete the phase 1 paperwork in three-five weeks, he said. The ultimate goal is a comprehensive trade agreement that's ready for him and Chinese President Xi Jinping to sign at a ceremony during the Asia-Pacific Economic Cooperation summit mid-November in Santiago, Chile, Trump said.
That the phase 1 deal lacks teeth until it’s documented on paper was apparent Friday in the administration's refusal to commit to delisting China as a currency manipulator. Trump said the two sides came “to conclusion” on a currency and foreign exchange package. Their agreement includes “transparency into the foreign exchange markets, ... so we’re very pleased with that,” said Mnuchin. Yet Treasury's Aug. 5 declaration of China as a currency manipulator remains in force, said the secretary: "We’ll be making a decision on that and evaluating it.”
There’s “a lot of agreement” in phase 1 on intellectual property theft protection, “but we’ll have some of that included in phase 2,” said Trump, again lacking specifics. “We’ve also made very good progress on technology transfer, and we’ll put some of technology transfer in phase 1.”
“Anything can happen,” acknowledged Trump to a reporter’s question about assurances the talks won't again fall apart as they did in May (see 1905080023). He doubts they will, he said. The two sides “know each other very well,” he said. “We’ve been negotiating this for a long time.”
A “very elaborate consultation process” will be built into the final agreement to enforce compliance, said Lighthizer. The two sides have “assigned various people” to the process and “created a structure under it,” he said. “We’re down to the final details of what will happen if there’s not a resolution.”
A trade deal would mandate monthly meetings between USTR staff and their Chinese counterparts, plus quarterly and semiannual meetings higher up the chain, Lighthizer told the House Ways and Means Committee in February (see 1902270047). U.S. companies would anonymously report alleged Chinese abuses through a USTR grievance procedure, “and we’ll be able to work those through the process,” he said then.
Any “patterns” the U.S. discerns from company reports of Chinese transgressions “hopefully will be resolved at the first or second level” of meetings, said Lighthizer in February. If there’s still "disagreement" when a dispute gets bumped up to his level, the U.S. would "act proportionately, but unilaterally, to insist on enforcement," he said then, suggesting punitive tariffs would remain on the table. USTR didn’t respond Tuesday when asked whether the enforcement procedures Lighthizer referenced at the White House Friday were those he described to Ways and Means last winter.