Wednesday, August 14, 2019

Trump Delays Tariffs Due To Christmas

What if they gave a tariff war and nobody came? That, unfortunately, isn’t what happened when President Trump launched his tariff war last year, which seems to have involved pretty much all of America’s trading partners, but at least American consumers have a reprieve from the president’s next round of tax increases.

Yesterday the Trump Administration suddenly delayed plans to implement some new tariffs on an additional $300 billion in Chinese goods that were slated to go into effect on September 1. The new tax would have added a 10 percent duty to items such as smartphones, laptops, toys, and videogames imported from China. Tariffs on some items such as tools, apparel items, and some footwear will still go into effect on September 1 while tariffs on other items, including Bibles and shipping containers, will be removed from tariff lists entirely.

“We’re doing this for Christmas season, just in case some of the tariffs would have an impact on U.S. customers,” Mr. Trump told the Wall Street Journal on Tuesday.

Trump’s statement flies in the face of months of claims that his tariffs do not affect American consumers and businesses. The president has maintained since the onset of the tariff war last year that tariffs were filling US “coffers” and were being paid directly by China at no expense to Americans.

The president’s statement that the delay for the tariffs was due to Christmas undercuts his previous claims that the tariffs only affected the Chinese. Although some Chinese celebrate Christmas, the birth of Christ does not warrant an official holiday in communist China. Christmas does, however, represent the major retail season in the United States. Both businesses and consumers would not be happy to find gifts from China to be 10 percent more expensive as the holiday approaches.

Despite claims of revenue being generated by the tariffs, the US government is losing money from the trade war. The Council on Foreign Relations points out that the Treasury collected $19 billion in tariff taxes from US importers, but is slated to pay out more than $25 billion to farmers hurt by the president’s trade policies.

Other sources in the Trump Administration say that there were other reasons for the delay. The announcement of the tariffs and disappointing news from the trade talks had prompted a loss of more than 1,000 points in the Dow since late July. The US reportedly took into consideration that businesses had already locked in prices for seasonal goods and would be forced to either absorb the cost of the tariffs or pass them along to consumers.

US officials warned that the move should not be seen as an olive branch to China, despite the fact that the US did not obtain any concessions for the delay. After the president announced the new tariffs in early August, China allowed its currency to depreciate and announced that it would suspend purchases of US agricultural products. So far, there has been no reversal of these policies.

Even if the delay is only temporary, the news was welcomed by the stock market. The Dow surged on the news, closing with a gain of 372 points.

Over the past few months, a clear pattern has emerged in financial markets. When the president announces tariffs or bad trade news, markets tank. On the other hand, when trade talks look promising or tariffs are delayed, the markets surge.

Perhaps Mr. Trump should take note.

Originally published on The Resurgent

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