Trade Talks Resume Following Government Shutdown

35; the number of days the federal government was shut down. This week, the U.S. Government was re-opened (temporarily), but the timing is so critical to global supply chains. In December, Presidents Trump and Xi agreed to a 60-day delay on the implementation of 25% tariffs on a large list of Chinese manufactured goods imported to the U.S.; March 1 is the currently slated date when these additional tariffs will be deployed if agreements are not in place, or additional delays are agreed to.

As the government returns to fully operational, trade talks are now resuming, and it couldn’t come soon enough. China is sending a delegation of high-ranking diplomats to Washington Wednesday to resume negotiations for two days; the objective, to reach potential proposals for review by the two Presidents.

Both countries have suffered in the recently chaotic trade environment. China’s annual growth slowed, manufacturers have down-sized or cut profits to ease the financial burdens of their U.S. counterparts, and concerns are growing regarding the future for the manufacturing giant if tariffs continue to come. The U.S. has faced issues as well; U.S. farmers have suffered significant losses in sales, and damage to international relationships that have taken years, or even decades, to establish. Many U.S. companies will be releasing quarterly earnings for Q4 of 2018 and with the effects of earlier enacted tariffs, earnings may come in below original forecasts holding the potential for more market volatility. U.S. importers have also taken on the heavy burden of a higher cost of goods, which has been particularly difficult to handle in situations where those same companies may have fixed sales prices to their U.S. vendors and few or no options to maneuver to more stable financial terms.

These talks are also occurring on the heels of the U.S. launching formal charges against Huawei, a leading tech firm based in China. Additionally, President Trump has made recent comments regarding the increased revenue to the U.S. government as a result of higher tariffs on so many items imported to the States. Chinese Vice Premier Liu He leads the delegation from China. He is the top economic advisor to President Xi and is expected to offer sizable concessions, primarily geared towards a better balance of the trade deficit including promises for agricultural and oil purchases. On the U.S. side, Robert Lighthizer, Trump’s trade representative is expected to push for more robust changes to overall trade and economic practices including intellectual property policies.

We hope to see positive results from the talks. Both economies stand to lose greatly if a resolution is not reached. Small and large companies alike depend on a reasonable outcome to this far-reaching issue and time is running short.  Stay tuned for updates.