US threatens further tariff hike on Chinese goods

US retailers are bracing themselves for increases in US tariffs on Chinese goods after president Donald Trump took to Twitter over the weekend to threaten further hikes in rates.

On Sunday, president Trump said that the 10% tariff rate on $200bn worth of Chinese goods would good up to 25% on Friday. Meanwhile, a 25% tariff on another $325bn worth of Chinese goods could be introduced at a later date.

The threat comes as the two countries are in the process of negotiating a trade deal, with talks due to continue on Thursday. The President said the increase in tariffs is in response to the slow progress of talks.

….of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%. The Tariffs paid to the USA have had little impact on product cost, mostly borne by China. The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!

— Donald J. Trump (@realDonaldTrump) May 5, 2019

The development is an unwelcome one for the air cargo industry. Analysts have said that a decline in demand on the China-US trade lane over the last few months is largely caused by the tariffs introduced by both countries last year.

US retailers have also warned of the impact of further tariff hikes. In a statement, the US National Retail Federation said: “Tariffs are taxes paid by American businesses and consumers, not by China. A sudden tariff increase with less than a week’s notice would severely disrupt U.S. businesses, especially small companies that have limited resources to mitigate the impact. If the administration follows through on this threat, American consumers will face higher prices and US jobs will be lost.

“We want to see meaningful changes in China’s trade practices, but it makes no sense to punish Americans as a negotiating tactic. If the administration wants to put more pressure on China, it should form a multinational coalition with our allies who share our concerns. We urge the administration to reconsider this tax hike on Americans and stay at the bargaining table until a deal is reached.” 

Freight forwarder Geodis told its customers to prepare for the tariff hike: “President Trump unofficially announced plans to raise the trade remedy tariff currently set at 10% to 25% effective Friday.  It appears that this will apply to all goods on the so called List III.  The President also suggested that extension of the trade remedy tariffs to all imports from China is a possibility.  

“An official notice will likely be published soon and we will share that information.   At this time, it is prudent to plan on the tariff increase for goods on List III effective for goods entered on/after May 10.  

“It is important that you work with your GEODIS account representative and carrier to confirm the arrival date for your merchandise, so wherever possible, the additional 15% can be avoided.”