A survey by shopping rewards app Shopkick found 60 percent of U.S. consumers will adjust where they shop if impending tariffs announced by the Trump administration take effect. The survey of 30,799 users, released Friday, was done June 28-June 30, before President Donald Trump’s Thursday tweet putting the 10 percent List 4 Section 301 tariffs into effect Sept. 1 on Chinese imports not previously tariffed. Of the 60 percent of consumers aware of the impending tariffs, some 40 percent reported having already seen prices increasing on store shelves, and 38 percent expect a household cost increase of up to $500; 30 percent expect a hike of more than $1,000. Roughly 60 percent said they plan to adjust the retailers they frequent; 44 percent plan to cut down on shopping; 29 percent are stocking up on goods now and 25 percent will switch to American-made goods, said the survey. Thirty-four percent of generation Z respondents were aware of tariffs vs. 74 percent of baby boomers. Half of millennials plan to reduce spending vs. 38 percent of baby boomers, 62 percent of whom plan to seek alternate options to cut costs, it said. Though the arrival and scope of tariffs are uncertain, consumers are “thinking ahead and plan to adjust their shopping habits and destinations, ushering in a new age of consumer shopping habits that American retailers will be forced to adapt to,” it said.
U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin traveled to Shanghai for talks Tuesday and Wednesday on a comprehensive U.S.-China trade deal, said the White House Wednesday. Vice Premier Liu He and Commerce Minister Zhong Shan led the Chinese delegation, it said. “The two sides discussed topics such as forced technology transfer, intellectual property rights, services, non-tariff barriers, and agriculture.” The Chinese “confirmed their commitment to increase purchases” of U.S. agricultural exports, it said. “The meetings were constructive, and we expect negotiations on an enforceable trade deal to continue” in Washington in early September, it said. The Shanghai meetings were the 12th round of negotiations that started in December, and were the first face-to-face talks between the sides since the negotiations broke down in May over Trump administration allegations that the Chinese reneged on previously agreed-to commitments (see 1905060015). Overhanging the talks is the threat that the administration could put the List 4 Section 301 tariffs into effect at any time on virtually all Chinese goods not previously dutied, including billions in consumer tech goods (see 1905140025). Senate Minority Leader Chuck Schumer, D-N.Y., cautioned President Donald Trump against giving in to China. "I’d say to President Trump 'I know these multinational corporations are pressuring you to cut a quick deal,'" Schumer said. "The president should not listen to these big corporations who want him to cut a deal quickly." Trump should also "hold tough on Huawei," Schumer said on the Senate floor Wednesday. "Don’t let there be giant loopholes. I am told that under the proposal being talked about, 80 percent of Huawei’s products could still be sold in the U.S. If we have a total boycott of Huawei, then China will beg us -- beg us -- to come to the table be make big concessions. It’s the best leverage we have, even better than the tariffs. China wants Huawei to dominate the world. They’ll find a way to do it unless we are tough as could be."
President Donald Trump appeared to put the kibosh on Apple’s requests for List 3 Section 301 tariff exclusions on Chinese imports of graphics processing modules, power supplies, heat sinks and a dozen other types of components for the Mac Pro desktop due this fall. Tweeted Trump Friday: “Apple will not be given Tariff waiver, or relief, for Mac Pro parts that are made in China. Make them in the USA, no Tariffs!” There are “no other sources” outside China “for this proprietary, Apple-designed component,” said Apple in each of the 15 product exclusion requests it filed July 18, as searchable Thursday on the Office of the U.S. Trade Representative public docket. “This product is a component of a consumer electronic device,” said Apple. “It is not strategically important or related to ‘Made in China 2025' or other Chinese industrial programs.” Public responses in support or opposition to the exclusion requests are due Aug. 1, and Apple had few backers among those who weighed in with an opinion through Friday. “USTR should not set a harmful precedent of exempting companies from tariffs that move jobs to an overt adversary of the United States,” commented Gregory Lewandowski on Apple’s request for tariff exclusions on Mac Pro graphics processing modules. “This is absolute garbage,” commented Logan Marotz of I.E. Productions. “We cannot continue to bend to the will of these companies. They knew the possible consequences of their actions by moving their assembly factories over seas. Tough luck, but this is the game they play.” Apple reportedly is shifting Mac Pro assembly to a contract manufacturer near Shanghai; that it's seeking tariff exclusions on imported parts suggests it's still doing final assembly in Texas, as it did with previous generations of Mac Pro desktops. Apple didn’t comment Friday, nor did USTR on Trump's tweet. Trump also targeted French President Emmanuel Macron Friday and France's initiation of a digital service tax, on which USTR launched a Section 301 investigation July 10. "France just put a digital tax on our great American technology companies," tweeted Trump. "If anybody taxes them, it should be their home Country, the USA. We will announce a substantial reciprocal action on Macron’s foolishness shortly. I’ve always said American wine is better than French wine!"
The National Retail Federation supported the Trump administration’s efforts to “modernize” the North American Free Trade Agreement “to reflect today’s business environment and support long-term U.S. economic growth,” and so it urges Congress to ratify the U.S.-Mexico-Canada Agreement on free trade, wrote Senior Vice President-Government Relations David French to House and Senate leaders Wednesday. Retailers are “encouraged by some of the new and updated provisions in USMCA relating to digital trade, cross-border data flows, and customs and trade facilitation,” said French. The internet has “changed the way everyone does business, along with ways that consumers purchase goods and interact with retailers,” he said. “As value chains have deepened, cross-border data flows have grown,” he said. “These modernized provisions will help ensure that the new agreement reflects today’s global economy.”
Japan chose a “dangerous and destructive mode of retaliation” in its trade dispute with South Korea, “one that is likely to greatly disrupt global electronic supply chains and bolster China’s push for dominance of 5G wireless," blogged American Enterprise Institute trade scholar Claude Barfield. Japan controls about 90 percent of the markets for two of the three chemicals, and 70 percent of the third, necessary to make semiconductors and flexible display panels, said the former consultant to the Office of the U.S. Trade Representative. It’s threatening to remove South Korea from the white list of countries with privileged security status, he said Tuesday. “This would force Korean companies to go through a time-consuming procurement process in the future," causing disruption to the global supply chain that would “ripple outward,” he said. South Korea asked the secretariat of the Wassenaar Arrangement to mediate the dispute with Japan, since both countries signed the 1996 agreement on curbing export of sensitive dual-use goods to rogue states. Japan claims South Korean manufacturers are allowing the chemicals to go to North Korea. "The secretariat responded that it has no mechanism to intervene in bilateral issues that may arise between member states," Korean press reported.
A China-U.S. trade deal would lead to lifting the ban on Huawei, speakers agreed during a Brookings Institution panel. All suggested a U.S.-China deal will eventually get done. The Commerce Department added Huawei to the Bureau of Industry and Security’s entity list in May, and recently showed willingness to loosen restrictions to mitigate impacts on U.S. exporters (see 1907100013). Blacklisting was more political than practical, said Information Technology and Innovation Foundation President Robert Atkinson and American Enterprise Institute Resident Scholar Derek Scissors. The Trump administration and Congress cited fears Huawei products can be used as state-monitored surveillance equipment. That was addressed with import restrictions, Atkinson said Thursday. “The Huawei ban had nothing to do -- nor should it have anything to do -- with national security,” he said. “Could we damage Huawei -- their national champion -- as leverage in a trade war? That's what that was about.” Atkinson said U.S. export controls against Huawei are “a total trade tactic” and China is never “going to accept a deal if the Huawei ban is still on.” Adding the company to the entity list was a trade tactic that will be easily undone, said Scissors. “We are much less linked to Huawei than some of the Europeans are and some of our other allies are,” he said. “The president will just say it doesn't matter to us.”
EU customs exemptions for low-value shipments may encourage undervaluation, reported the European Court of Auditors on collection of customs duties for e-commerce imports. Duties aren’t levied on imports of goods less than 150.01 euros ($168). "These low value consignment reliefs (LVCR) can be abused via: (i) undervaluation of goods, which are declared below the thresholds for the VAT and/or customs exemptions; (ii) splitting consignments to be under the threshold limit; (iii) importing of either commercial consignments declared as gifts or of goods which are ineligible for the relief," auditors said. Ildiko Gall-Pelcz from the European Court of Auditors said Tuesday that “e-commerce is particularly open to abuse and its vulnerability to irregularities and fraud has not yet been fully mitigated.”
China believes trade “frictions” with the U.S. “should be resolved through dialogue and consultation,” said a Foreign Affairs Ministry spokesperson Wednesday. He was asked about President Donald Trump’s remarks at a cabinet meeting Tuesday that the U.S. has a “long way to go” before reaching a trade deal with China and can still impose the threatened List 4 Section 301 tariffs on $325 billion worth of Chinese goods “if we want.” If the U.S. “thinks there is still a long way to go before a deal is concluded, well, as the Chinese saying goes, a journey of a thousand miles begins with a single step,” said the spokesperson. “No matter how long the way is, as long as you step forward, you will eventually reach the destination.” Amid the U.S. threat to impose the List 4 duties, “China will firmly defend its own interests,” said the spokesperson. “If the U.S. does impose new tariffs, that will indeed set new obstacles for the trade talks. There will be an even longer way to go before reaching a deal.” The U.S. tech industry paid $1.3 billion in tariffs on Chinese goods in May, more than six times more than it paid in May 2018, despite a 31 percent decline in imports, said CTA Wednesday. Though the Trump administration delayed enacting List 4, "U.S. workers, families and businesses are still paying billions of dollars more than they otherwise would," said CTA President Gary Shapiro. "The economic pain for everyday Americans and our companies will only grow, since tariffs have more than doubled on the largest list of products."
There’s no question China “has engaged in unfair trade practices such as forced technology transfer and intellectual property theft,” Sen. Dianne Feinstein, D-Calif., wrote U.S. Trade Representative Robert Lighthizer June 17, as posted Tuesday in docket USTR-2019-0004. “The question is whether the broad-based tariffs imposed and proposed by the current administration are the right approach to addressing such issues,” said Feinstein. “They are not.” The Section 301 tariffs on Chinese imports “threaten U.S. jobs and businesses, including so many of those in California that rely on international trade,” she said. “The ports of Los Angeles and Long Beach, which handle nearly half of the container trade with China, have seen the flow of goods slowed due to the tariffs and the uncertainty surrounding them.” Feinstein has heard from “numerous” California companies “about the pain the tariffs are causing them,” she said. The tariffs are “disrupting their supply chains and raising their costs of doing business in ways that damage their competitiveness and in some cases, threaten their existence,” she said. The “primary impact” of the proposed List 3 tariffs “will be to damage our own citizens, businesses, and economy,” she said. “I urge you to pursue alternative approaches to address real trade issues with China.” Lighthizer’s office didn’t comment Tuesday. Three rounds of 25 percent tariffs remain in effect on roughly $250 billion worth of Chinese imports. President Donald Trump last month delayed putting the threatened List 4 duties into effect on virtually all remaining Chinese goods as the U.S. and China try to restart talks toward a comprehensive trade deal (see 1907010015). U.S. and Chinese negotiators remain in close "communication" by phone, but there's not yet a date for their next face-to-face meetings, said a Chinese Foreign Affairs Ministry spokesperson Tuesday. He denied as "entirely misleading" Trump's claim in a Monday tweet that China's Q2 economic performance was its worst in 27 years and is why China wants to make a deal. China's GDP grew 6.3 percent in 2019's first six months, which was "quite a good performance, especially when you compare it with that of other major economies," said the spokesperson. "China is not the only one that wants to conclude a trade deal. The U.S. wants it too. American people, especially consumers, strongly oppose the trade war and the additional tariffs on Chinese goods. Their voice speaks volumes."
The Office of the U.S. Trade Representative set deadlines and a hearing for its Trade Act Section 301 investigation into France's digital services tax (see 1907110033). Request to appear by noon Aug. 12 for the Aug. 19 hearing that starts at 9:30 a.m. that day, USTR said. The regulations.gov docket is USTR-2019-0009. Aug. 26 is when post-hearing submissions are due.