The back-and-forth between the U.S. and China shows no signs of stopping. President Donald Trump announced Wednesday night that he would delay tariffs on $300 billion worth of goods originally planned for September to December, but in a statement released this morning, China's State Council Tariff Committee said that it "has no choice but to take necessary measures to retaliate" to the expansion anyway.
Yet this latest posturing doesn't appear to have affected plans for U.S. and China leadership to have trade talks in September. Trump praised China President Xi Jinping immediately after calling out China for its response to the Hong Kong protests and then ended his tweet with "personal meeting?" It's not clear if that meeting would be part of the already-scheduled talks or a separate meeting.
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Trump delayed tariffs on $300 billion of goods imported from China in June, then announced on August 1 that he would apply the 10% tariffs after all, to which China responded by refusing to purchase agricultural goods from the U.S. and devaluing the yuan. That's just the last three months; the U.S. previously introduced and expanded tariffs on Chinese goods as well as blacklisting Huawei.
The result has been months of confusion while companies attempt to figure out if they're allowed to do business with Huawei, if their products are going to be subject to higher tariffs, and how China will respond to the U.S. These continued action-retaliation cycles suggest that nobody will have any clarity any time soon, even if the U.S. and China remain committed to holding trade talks in the coming months.
Numerous companies have already decided to sidestep the issue completely by shifting their production outside China. That can be prohibitively expensive, though, especially if relations between the countries improve sooner than expected. Another option would be to raise product prices to offset the extra costs incurred by the tariffs; that way companies would at least be able to preserve their margins.
You don't say!
The economy likes stability. The business world likes stability. Even Wall Street has been sounding warnings about how the indecisiveness is creating confusion and instability, and how the situation can set a potential recession in motion, and simply once again reversing or postponing a decision will NOT be able to reverse the process anymore.