Tariffs, Tariffs, Tariffs. We hear and read this word frequently in recent months, often accompanied by fear, concern and uneasiness.
Section 301 tariffs against Chinese manufactured goods are inching ever-closer to becoming a reality. Announced months ago, government tribunals, public hearings and open public comment periods have all ceased as of yesterday. China sent delegates to the US, threatened further retaliation, offered small concessions to help balance trade relations with the US, but all of this has resulted in little, if any deviation from the planned course.
Section 301 tariffs would increase US import duties on approximately $200b in Chinese manufactured products and goods to the tune of 10-25% – that number is still not clear. US businesses, the US public, China and other nations around the world are standing by waiting to learn what the final decision will be. President Trump commented earlier today from Air Force One stating implementation of 301 tariffs “will take place very soon depending on what happens,”. Following this comment which strongly indicates importers and consumers should prepare to see these deployed as planned, more breaking news was delivered.
Following initial statements on section 301, President Trump added “I hate to do this, but behind that there is another $267 billion ready to go on short notice if I want.” US markets quickly reacted at the release of this news, as will global markets when they open following the news. If we see another round of tariffs at that amount, it would cover essentially every last item imported from China.
This comes in on the heels of NAFTA concerns excluding Canada as well as President Trump’s announcement this morning that Japan may be the next target on his tariff list. While nothing concrete has been settled beyond the currently imposed tariffs on $50b for China one thing is certain; this global trade war is unlikely to end any time soon.