While the APEC Leaders’ meeting in Chile next month looms large over the US-China manufacturing sectors, remember this… There are still five weeks before then and things continue to develop rapidly. The latest suspension of the expected $250 billion increase in tariffs on Chinese imports does give some reprieve, however. This is especially true for those who’re closely monitoring the situation. Yet, it seems that more movement behind the scenes is likely, with measured responses coming from the US and Chinese governments.
The leaders on both sides are weighing options and exchanges remain mostly civil. The latest suspension did nothing for the existing tariffs imposed since 2018. These remain in effect until the two countries can negotiate a final trade deal going forward.
Tariffs and the Latest Trade Deal’s Details
Experts remain skeptical, but negotiators made some headway during the latest round of talks. The US agreed to suspend efforts to expand tariffs, while China conceded to purchase more farming goods from the US. They also proposed measures for tackling intellectual property, financial services, and currency controls.
China refused to make big concessions on industrial subsidies but a recent message from President Xi Jinping to U.S. President Donald Trump could indicate that both sides have had enough. The message reiterated that a healthy trade agreement between the world’s two largest economies would be beneficial for both countries and the larger global marketplace.
What the US Administration is Saying
There’s still a long way to go before anyone puts a pen to paper, but the latest from US negotiators seems positive. The administration agreed that instead of seeking a massive, single agreement, it might be better to continue negotiations and work out incremental deals over the next year. One concession the US may still give China is to rescind the declaration which named the country as a currency manipulator.
What the Chinese Government is Saying
China’s negotiators are staying rather tight-lipped regarding the developments and deals concerning tariffs. Although the parties agreed to a phase one deal in principle, whether they will sign it by next month remains unconfirmed. They did confirm the increased purchases of US agricultural products but didn’t provide the final amounts. Chinese market factors will ultimately determine how much US products they will import.
Is There Hope at the End of the Tunnel?
Luckily, it looks like the posturing on both sides of the table may be over. An amicable resolution between the parties seems to be on the horizon, although it will come in phases. If the countries ratify the phase one agreement, it would become the precedent and establish the basis of how subsequent agreements would follow. After a standoff that lasted almost two years, offshore manufacturers may see progress over the next year concerning tariffs.
The confusion and uncertainty may continue for some time. One thing is for certain, the overall situation is different even as you’re reading this BLOG compared to when we wrote it. Meanwhile, life and business must go on!
If you’re looking to move forward or you’d like to discuss your current situation and fine-tune your strategy, call us. Contact ITI Manufacturing to discuss a range of outsourcing options. Yet, for immediate assistance and information, give us a call toll-free at 281-242-7030.