This week, markets were volatile again as the White House whipsawed on its already-confusing tariff policy. Then, yesterday, reports came out that the White House is considering making the first move in de-escalation with China in its burgeoning trade war.
Since President Trump announced a broad swathe of tariffs earlier this month, financial markets and businesses have reeled from the potential effects, some of which are already being felt.
Why the change of heart from the Trump White House?
Perhaps no other effect has spooked the White House like emerging container data, which shows that some container bookings to the U.S. from China and other countries is down more than 60%. With container voyages taking weeks to arrive, the true effects of the new tariff policy are potentially weeks away from really being felt in the U.S. But, the White House is concerned enough that they are broadcasting a potential change in tariff policy with the Chinese government.
Reports suggest that the U.S. is preparing to significantly reduce the tariffs against China from their current 145% level. Some reporting suggests that the reduction may be as much as 60%.
China’s Response and Point-of-View
China for its part, is playing coy as part of its ongoing trade messaging back-and-forth with the U.S. Chinese Ministry of Commerce spokesman He Yadong said:
“China’s position is consistent and we are open to consultations and dialogues, but any form of consultations and negotiations must be conducted on the basis of mutual respect and in an equal manner.” He quickly added “Any claims about the progress of China-U.S. trade negotiations are groundless as trying to catch the wind and have no factual basis.”
China’s official position, at the moment, is that it wants the U.S. to cancel all tariffs. However, the White House has not even hinted that the possibility of all tariffs being removed is being debated.
What’s the likely outcome at this time?
In the end, what’s far more likely is a broad deal that strikes tariffs on core Chinese imports to the U.S., while maintaining some level of tariffs on goods deemed a “national security risk” such as semiconductors, construction equipment, cranes, energy-related imports, precious metals, and more.
One major issue for investors and the Trump administration is that Trump’s tariff policy, specifically for China, has been all over the map with a lack of clarity over specific rates. For example, one announcement pinned tariffs on China at the 50-60% level, before the current 145% level was announced. Then, reporting last week suggested an increase into over 1,000% tariffs on some Chinese goods, a move seen by most as postering by the U.S. government.
At MoreThanShipping.com, we will continue to keep you posted on tariff-related policy and tariffs being assessed against shippers. Our goal is to keep you informed to make the most educated decisions necessary for the next few months.
