'Gesture of Goodwill': Trump Delays Tariff Increase by 2 Weeks

Credit: Donald A. Katchusky/ShuttterstockCredit: Donald A. Katchusky/ShuttterstockPresident Donald Trump has delayed a tariff increase on $250 billion worth of good imports from China by two weeks. The delay, announced Wednesday, would've raised tariffs on those goods from 25% to 30% on October 1; now the bump will go into effect on October 15.

Trump said in a tweet that he delayed the increase "at the request of the Vice Premier of China, Liu He, and due to the fact that the People's Republic of China will be celebrating their 70th Anniversary." He also said the delay was a "gesture of good will [sic]." The two countries have been engaged in a slowly escalating trade war for much of 2019, with China becoming more retaliatory over the last month.

This delay followed the expansion of 15% tariffs on $110 billion worth of goods on September 1. Most tech products were unaffected by that expansion, but certain devices were included in the list of tariffed goods, including wireless headphones and the Apple Watch. In addition to the increase that was planned for October 1, the U.S. is set to raise tariffs on many consumer electronic products on December 15.

It's not clear if yesterday's announcement will lead to further delays of the expanded and increased tariffs. The holiday shopping season could still be affected by the increase scheduled for December 15.

We've said before that all this uncertainty makes it hard for U.S. tech companies to know how to move forward. Should they make their products outside ChinaRaise prices to reduce the impact of these increased tariffs? Accept lower margins? This delay won't offer them answers; it will merely give them a little more time to wonder what the U.S. and China will do to each other next.

    Your comment
  • mihen
    Uncertainty is the goal.
  • bit_user
    Uncertainty is the goal.

    I don't know that you can have effective negotiations, once trust has broken down. And seemingly whimsical decisions like this certainly undermine one's trustworthiness. At some point, the Chinese will just assume the worst case, and start planning around that. I'd be surprised if they haven't done so, already.

    But, the worst move Trump made was certainly to have these negotiations be so public. The Chinese absolutely don't want to set any sort of precedent or show any weakness. If they do, the EU could be next in line to try and win some concessions, for instance.
  • mihen
    I don't think Trump's goal is a trade agreement. Even if it was, Congress will make alot of concessions to the Chinese after the President's men come to an agreement with China and it would probably be stalled a year as the USMC trade agreement is.
    I think the goal is fighting China as an economic adversary and moving production away from China.