U.S. Customs and Border Protection has released May’s schedule of webinars hosted by the National Import Specialist Division on various commodities topics, including a walkthrough of Chapter 67 covering articles made of feathers or down. The schedule and registration links can be found below. 

A Walk through Chapter 59 - Wednesday, May 22, 2019, 1:30-3:00pm EDT
Registration
Cancellation
 
Seafood Products of Chapter 3 and 16 - Thursday, May 23, 2019, 1:30-2:30pm EDT
Registration
Cancellation
 
Water Sport Equipment and Water Craft - Wednesday, May 29, 2019, 1:30-2:30pm EDT
Registration
Cancellation
 
Chapter 67; Odds and Ends - Thursday, May 30, 2019, 1:30-2:30pm EDT
Registration
Cancellation

As you have seen in the press, on Sunday President Trump used Twitter to complain that the trade negotiations with China are going too slowly and that the U.S. will increase the tariffs on Tranche 3 products from 10% to 25% later this week.  He also said that “shortly” he will impose 25% tariffs on all U.S. imports from China.  This is a reversal from the optimism last week that we were close to a deal.  

Just to recap, on Friday Administration officials said they were pleased with the progress in the trade talks, following meetings in Beijing led by U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.   The lead Chinese negotiator, and Chinese Vice Premier Liu He, were scheduled to be in Washington for talks later this week, and many thought that the final deal would be announced on Friday.  Instead there is the threat that duties on many consumer products included in the Tranche 3 of the 301 retaliation will jump to 25% on Friday.  And this morning there are reports that the Chinese Vice Premier is no longer going to accompany the Chinese delegation to D.C. 

What happened?  Some observers suggest that the President’s tweets confirm that the two sides are close to a deal and the Administration wants to be able to claim that the tariffs are the reason.  And they think that they may be able to get a few additional concessions from China as part of the deal.  Others think that the President is moving away from the deal and that he believes the strong economic numbers for the U.S. economy mean that the Administration can take a tougher position.  This raises another question – does the President really think the tariffs are paid by China and are helping the economy?   If yes, that is bad news for the deal.  One final guess is that President Trump may want to delay the final agreement until the two leaders – Trump and Xi – meet later this month.  

Honestly right now no one knows, but we will be watching closely for the next update.

The Trump Administration is ready to increase the tariffs at 12:01am on Friday for the products on Tranche 3 of retaliation.  The penalty duty will jump to 25% from the current 10% rate.   The Federal Register notice is supposed to be released today and we want to share a flavor of the current discussions.  We will send the Federal Register notice when it is available.  

Following the President’s tweets this weekend, Administration trade officials met with reporters yesterday. While Treasury Secretary Steven Mnuchin told reporters that it is possible the tariff hike could be delayed if there is good progress during this week’s meetings (which start on Thursday), that is not what U.S. Trade Representative Robert Lighthizer is saying.  AXIOS reports the following:  

A reporter asked Lighthizer what he would say to American businesses who already have goods on the water headed to U.S. ports, which will face significantly higher costs if the tariffs go into effect. Lighthizer said, "There'll be ways to work out" the situation but he gave no specifics. He said it's been clear for some time that something like this — a dramatic tariff increase — could happen. U.S. businesses, in other words, should have been prepared for this.

We also expect another Federal Register notice this week that will begin the process for imposing penalty tariffs on ALL imports from China.  It appears that the Administration will follow the process used last year and will request public comments and will hold hearings before these additional duties might go into effect.  

What is going on?   It appears that there are internal battles about the scope of the trade deal both in the Trump Administration and in China. Here in the U.S. there is a battle between Trump Administration officials who want a deal versus those who think the U.S. has the advantage in the talks.  The President sees a positive economic impact from the billions of dollars in additional duties collected.  

Let me share a few quotes from Politico today that give a flavor of the mood in the White House.  From Politico Morning Money,  an unnamed senior White House officials is quoted as saying "We have leverage. They have more to lose. It's simple math. They cannot lose access to the U.S. consumer."  In another Politico story, China advisor to President Trump, Michael Pillsbury of the Hudson Institute, said President Trump was unhappy with the positive statements about the talks from both Mnuchin and Advisor Larry Kudlow.  Pillsbury also said that adding more tariffs on Chinese products would create more incentives for China to change its policies.  

Press reports this week suggest that we are getting close to a major trade deal between the U.S. and China.  The final deal is expected to include commitments for changes to Chinese intellectual property rules and forced technology transfer requirements, as well as a big increase in Chinese purchases of U.S. exports, especially agriculture and natural gas. There also will be a new level of enforcement tools to ensure that China changes its policies and lives up to the agreement.  

The biggest question now – will the U.S. remove the tariffs imposed on imports from China.  While we expect that the Trump Administration will leave some of the tariffs in place, it looks likely that Tranche 3 – the ten percent tariffs that affect quite a few consumer products – will be removed when the deal is signed.  But … don’t start celebrating quite yet.  There still is a lot to finalize – including when and where President Trump and President Xi will sign the deal.   We are cautiously optimistic and will keep USFIA members informed as the negotiations continue.