China believes that trade “frictions” with the U.S. “should be resolved through dialogue and consultation,” a Foreign Affairs Ministry spokesperson said on July 17. He was asked about President Donald Trump’s July 16 Cabinet meeting remarks 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,” the spokesperson said. “No matter how long the way is, as long as you step forward, you will eventually reach the destination.” In the face of the U.S. threat to impose the List 4 duties, “China will firmly defend its own interests,” the spokesperson said. “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.”
Consultations over South Korea's monopoly law sought back in March (see 1903150025) occurred July 9, the Office of the U.S. Trade Representative announced. Michael Beeman, assistant U.S. trade representative for Japan, Korea and Asia Pacific Economic Cooperation Affairs, led the consultation in South Korea. The U.S. says South Korea is not living up to its commitments in the U.S.-Korea Free Trade Agreement (KORUS). The agreement says that a party before the Korea Free Trade Commission or the International Trade Commission should be able to review and rebut the evidence against it.
Huawei will remain on the Commerce Department Bureau of Industry and Security's Entity List but "we've opened the door, relaxed a bit the licensing requirements from the Commerce Department where there are not national security influences or consequences," White House Chief Economic Adviser Larry Kudlow said at a CNBC Capital Exchange event July 9. For example, "some of the chip companies would be permitted to sell on a limited basis to Huawei," he said. Those may be parts for "general merchandise" that ends up in countries "where we don't hold any great cachet," such as South Korea or Vietnam, he said. "That's the sort of thing that will be opened up that was closed." Kudlow also noted that China and the U.S. aren't far apart in their trade talks, but said that sometimes the last pieces can be the most difficult to resolve. China has resisted U.S. requests for change in Chinese laws and for enforcement provisions, he said.
The Commerce Department posted an updated version of its "Foreign Retaliation Product Scope Matrix" that lists U.S. goods that are included in various countries' retaliatory tariffs. The list includes the affected subheadings and which country's tariffs include the subheadings. The list includes the retaliatory measures by China, the EU, India, Turkey and Russia.
Even if a deal is struck with China, things won't return to how they were before, a trade consultant and the National Foreign Trade Council CEO agreed while on a panel. Rufus Yerxa, CEO of the National Foreign Trade Council, told the American Association of Exporters and Importers Annual Conference June 28: "I fear we get to a situation where we can’t go back, and we can’t go forward, either."
The U.S. should negotiate deals and strengthen trade with Mexico, Korea and Taiwan, a move that would substantially help U.S. exporters, the Information Technology and Innovation Foundation said in a June report. The report offers several policy recommendations for Congress and the Trump administration to boost exports, including: sign a U.S.-Taiwan trade agreement, pass the U.S.-Mexico-Canada Agreement, “reanimate” the Trade in Services Agreement, continue stifling Chinese “innovation mercantilism,” and ensure U.S. export controls don’t hinder exports to Taiwan, Mexico and Korea.
The Mexican Senate voted to ratify the U.S.-Mexico-Canada Agreement on June 19, positioning Mexico to become first of the three countries to approve the renegotiated NAFTA. There have been some initial movements toward consideration of the deal by the U.S. Congress, and Canada is seen as likely following the U.S.'s lead before its legislature gets fully engaged (see 1906110040).
Most of the questions to U.S. Trade Representative Robert Lighthizer about the Section 301 tariff actions focused on the pain to U.S. consumers and the difficulties faced by importers of products that are subject to 25 percent tariffs. But Sen. John Thune, R-S.D., told the nation's top trade negotiator that even a local meat locker has been hurt by the trade war. Thune, who was questioning Lighthizer during his appearance June 18 in front of the Senate Finance Committee, said the meat locker employee told him that before the trade war began, someone would buy cow hides for $150 each. China imports a lot of animal skins to support its furniture and shoemaking industries. "Now I have to pay 600 a head to haul it away," Thune said the man told him, which is a cost of $40,000 a year. For a business that size, that could be the entire profit margin, Thune said.
Trade negotiations will resume with China ahead of a meeting between President Donald Trump and President Xi Jinping, Trump tweeted June 18. He said he and Xi "will be having an extended meeting next week at the G-20 in Japan." The White House said the two leaders talked on that morning about "structural barriers to trade with China and achieving meaningful reforms that are enforceable and verifiable."
A bipartisan group of 23 lawmakers from Arizona, California and Texas objected to the possible inclusion of "seasonality" provisions within the implementing legislation for the U.S.-Mexico-Canada Agreement in a June 14 letter to U.S. Trade Representative Robert Lighthizer. "Seasonality, whereby certain agricultural products could be subjected to numerous seasonal and regional dumping duties at various times throughout the year, runs counter to the spirit of a free trade agreement intended to tear down both tariffs and non-tariff barriers to trade," the lawmakers said. "Using USMCA as a vehicle for pursuing seasonal agriculture trade remedies risks pitting different regions of the country against each other."