Tariffs on $200 billion worth of goods from China will remain at the rate of 10% and not rise to 25% on Jan. 1, 2019, The White House announced after a meeting between Donald Trump and Chinese President Xi Jinping at the G-20 summit over the weekend.
China has agreed to purchase a “very substantial” amount of agricultural, industrial and energy products from the U.S. in an effort to reduce the trade imbalance between the nations, according to the announcement.
The two leaders will immediately begin negotiations on intellectual property, non-tariff barriers, cybersecurity and more. If the administrations don’t reach an agreement on the matters in the next 90 days, tariffs will rise to 25%.
U.S. business leaders welcomed the news of a delay of an increase in the tariff rate between the U.S. and China.
“America’s retailers are encouraged by President Trump and President Xi’s decision to find a path forward that will keep America competitive, grow our economy, and support the millions of American jobs impacted by trade,” Hun Quach, VP for international trade for the Retail Industry Leaders Association, said in a statement.
Tariffs have proven taxing on many companies, especially those with global supply chains and suppliers in China. American businesses paid a collective $4.4 billion in tariffs in September 2018, a 54% increase over September 2017.
The additional costs are hitting both top and bottom lines and triggering price hikes across various industries as costs are passed on to the consumer.
U.S. soybean farmers took a significant hit from the trade war after China imposed a 25% tariff on the agricultural product in retaliation for U.S. tariffs on $200 billion of Chinese imports. Export shipments dropped dramatically as China, one of the largest buyers of U.S. soybeans, sought alternative sources to avoid the high taxes.
“China has agreed to start purchasing agricultural product from our farmers immediately,” the White House said after Trump and Xi’s meeting.
Donald J. Trump ✔@realDonaldTrump
Farmers will be a a very BIG and FAST beneficiary of our deal with China. They intend to start purchasing agricultural product immediately. We make the finest and cleanest product in the World, and that is what China wants. Farmers, I LOVE YOU!
Tariffs could still rise to 25% in March 2019, if Trump and Xi don’t reach an agreement on intellectual property and technology transfer issues. In addition, the 10% tariffs on $200 billion worth of Chinese imports remains in place, along with numerous other tariffs.
Still, companies are encouraged by signs of progress in trade negotiations. “We hope this 90-day tariff pause will lead to a positive resolution that removes tariffs altogether and improves US-China trade relations,” the National Retail Federation wrote in a statement.