The impending expiry of the 90-day postponement on increased tariff imposition on China, scheduled for this Tuesday, adds a layer of uncertainty concerning its possible extension. Late last month, during the latest bout of China-U.S. trade discussions, both parties anticipated another 90-day extension. However, President Donald Trump’s approval is critical for this decision.
As of now, no official statement has been made on whether the tariffs will be enforced or an extension will be sanctioned. This lack of clarity is causing disruptions for businesses, and a sudden hike in import duties could have a considerable impact on global markets. Previous tariff rate adjustments and deadline shifts by Trump add to the unpredictability of the situation. The immediate plans from either side remain undisclosed.
If the trade agreement deadline with China is prolonged, it would hold back the previously threatened tariffs of up to 245%. Elevated tariffs aim to neutralize the substantial and persistent U.S. trade deficit with China. Interestingly, Chinese exports declined in July, reducing the trade deficit to a 21-year low due to the impending tariff threat.
U.S. usually provides insights into the progress of negotiations, while China, on the other hand, typically reserves its pronouncements until significant decisions are finalized. As of now, the Chinese administration has chosen to remain quiet in advance of Tuesday’s deadline.
In a recent discussion, the U.S. Vice President JD Vance revealed Donald Trump is contemplating additional tariffs on Chinese goods due to China’s engagement in Russian oil purchases. His assertion underlines the lack of hard resolution so far from President Trump regarding this issue.
The prospect of exceptionally high tariffs on Chinese exports to the U.S. poses a substantial challenge to Beijing, especially while the Chinese economy, being the second largest globally, is gradually recuperating from a prolonged slump in its real estate market. The prolonged COVID-19 repercussions have led to increased reliance on unstable gig work, thus shrinking the job market.
Increased import duties on small packages from China have further impacted smaller production units, nudging layoffs to pick up pace. However, the U.S. remains significantly dependent on China for a myriad of products such as household articles, apparel, wind turbine components, basic semiconductor chips, batteries for electric vehicles, and necessary rare earth elements for manufacturing them. This gives Beijing a strong bargaining chip in their negotiations with Washington.
Despite the possibility of high tariffs, China continues to be a viable competitor for numerous goods. Chinese policymakers understand the gradual emergence of the revenue impact from raised tariffs on the U.S. economy. Currently, a 10% baseline tariff and a supplementary 20% tariff concerning the fentanyl issue are charged on imports from China.
Moreover, selected products are subject to even higher rates. On the other hand, U.S. exports to China face an approximate tariff of 30%. Prior to the temporary cessation of hostilities, Trump threatened to impose a whopping 245% import duty on Chinese commodities, which was met with retaliation from China threatening to raise tariffs on U.S. goods to 125%.
The prospect of a full-blown trade war between the largest global economies renders global implications. It affects industrial production chains, demand for commodities such as copper and oil, and holds sway over geopolitical affairs including the Ukrainian conflict.
Following a conversation with the Chinese leader Xi Jinping, Trump mentioned his intention to meet Xi later in the year. This desire to negotiate directly with Beijing suggests a positive inclination towards reaching an agreement. Nevertheless, should the truce negotiations fail, trade tensions could rise, with the possibility of tariffs escalating to unprecedented levels.
If escalated, the impact will be felt on both economies and is likely to send shocks through the global markets. Businesses might delay committing to investments and new employees, while inflation stands to peak higher.
The post Looming US-China Tariff Deadline Stokes Global Market Fears appeared first on Real News Now.
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