Donald Trump delays 10% tariffs on Chinese cellphones, laptops, toys; markets jump as relief for retailers, technology groups

  • Donald Trump on Tuesday backed off his 1 September deadline for 10 percent tariffs on remaining Chinese imports, delaying duties on cellphones, laptops and other consumer goods

  • The delay which, affects about half of the 300 billion dollars target list of Chinese goods, sent stocks sharply higher and drew cautious relief from retailers and technology groups

  • The US Trade Representative’s Office announced the decision just minutes after China’s Ministry of Commerce said Vice Premier Liu He conducted a phone call with US trade officials

Washington: US President Donald Trump on Tuesday backed off his 1 September deadline for 10 percent tariffs on remaining Chinese imports, delaying duties on cellphones, laptops and other consumer goods, in the hopes of blunting their impact on US holiday sales.

The delay which, affects about half of the 300 billion dollars target list of Chinese goods –along with news of renewed trade discussions between US and Chinese officials – sent stocks sharply higher and drew cautious relief from retailers and technology groups.

 Donald Trump delays 10% tariffs on Chinese cellphones, laptops, toys; markets jump as relief for retailers, technology groups

File image of US president Donald Trump and China's president Xi Jinping. Reuters

Trump’s 10 percent tariffs will be effective from 15 December for thousands of products including clothing and footwear, possibly buttressing the holiday selling season from some of the fallout from the protracted trade spat between the world’s two largest economies.

“We’re doing this for Christmas season, just in case some of the tariffs would have an impact on US customers,” Trump told reporters in New Jersey. “Just in case they might have an impact on people, what we’ve done is we’ve delayed it so that they won’t be relevant to the Christmas shopping season.”

The US Trade Representative’s Office announced the decision just minutes after China’s Ministry of Commerce said Vice Premier Liu He conducted a phone call with US trade officials.

Liu agreed with US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin to speak again by phone within the next two weeks, the ministry said.

Trump has said the two sides may still meet in early September as scheduled.

Apple shines
The delay in tariffs on a substantial portion of a 300 billion dollar list of remaining Chinese imports sent US stocks surging, after steep losses in the past week, with the Standard and Poor's 500.SPX up 1.5 percent and the Nasdaq Composite. IXIC gaining nearly two percent.

Shares of market bellwether Apple Inc (AAPL.O) soared 4.2 percent on news that its core iPhone, tablet and laptop computer products would be spared from tariffs for the time being.

But the Trump administration still plans to impose 10 percent tariffs on thousands of Chinese food, clothing and other consumer electronics products beginning Sept. 1.

Among these are Chinese-made smartwatches from Apple and Fitbit (FIT.N), smart speakers from Amazon.com Inc AMZN, Google (GOOGL.O) and Apple, and Bluetooth headphones and other devices, a category estimated at 17.9 billion dollars last year by the Consumer Technology Association.

Flat-screen televisions from China, a category worth 4.5 billion dollars, also will face 10 percent tariffs on 1 September after being spared from Trump’s first round of tariffs more than a year ago.

Live animals, dairy products, skis, golf balls, contact lenses, lithium-ion batteries and snowblowers will also get tariffs on 1 September.

A trade group representative said USTR informed them that it opted to delay tariffs on items where China supplies more than 75 percent of total US imports. Product categories where China supplies less than 75 percent will still face tariffs on 1 September, the representative said, speaking on condition of anonymity because the information was not publicly released.

According to US Census data, China supplied 82 percent of US cell phones and 94.5 percent of US laptops in 2018.

Based on a Reuters analysis, the delay could extend to around half of the 300 billion dollars lists of remaining Chinese imports. Chinese imports subject to the tariffs on 15 December totalled about 156 billion dollars last year, according to US Census Bureau data.

While most retailers would have stocked their holiday merchandise before the September deadline, some might have faced the tariffs for fill-in orders late in the holiday shopping season.

Still, the Retail Industry Leaders Association said: “removing some products from the list and delaying additional 10 percent tariffs on other products, such as toys, consumer electronics, apparel and footwear, until 15 December is welcome news as it will mitigate some pain for consumers through the holiday season.”

The Consumer Technology Association applauded the delay on some items but added: “Next month, we’ll begin to pay more for some of our favourite tech devices – including TVs, smart speakers and desktop computers. The administration should permanently remove these harmful tariffs and find another way to hold China accountable for its unfair trading practices.”

The 21-page-list of products that will not get hit with tariffs until December also includes baby monitors and strollers, microwaves, instant print cameras, doorbells, high chairs, musical instruments, ketchup dispensers, baby diapers, fireworks, sleeping bags, nativity scenes, fishing reels, paint rollers and food products.

A separate group of products will be removed from the tariff list altogether, the USTR said, “based on health, safety, national security and other factors.” It did not immediately identify these items.

Trump announced the 1 September tariffs less than two weeks ago, blaming China for not following through on promises to buy more American agricultural products during talks in Shanghai at the end of July. That move was met with a drop in China’s yuan currency a few days later, prompting the Trump administration to declare Beijing a currency manipulator and sending markets tumbling for several days last week.

Since Trump’s 1 August tweets announcing the new tariffs, the US benchmark S and P stock index has dropped more than four percent.

The tariff delay, combined with renewed talks with China, suggests Trump may be willing to compromise.

In a sign the administration may be expecting something in return, Trump tweeted on Tuesday.

Trump’s tariff delay comes amid growing concerns about a global economic slowdown. Goldman Sachs said on Sunday fears of the US-China trade war leading to a recession were increasing and Goldman no longer expects a trade deal between the two countries before the 2020 US presidential election.

Trump has also personally criticized Chinese President Xi Jinping for failing to do more to stem sales of the synthetic opioid fentanyl amid an opioid overdosing crisis in the United States.

The USTR office plans to conduct an exclusion process that could allow more items to be removed from the 10 percent tariff list.

Updated Date: Aug 14, 2019 11:55:12 IST