U.S. delays China tariffs on some holiday-shopping favorites
The Trump administration will delay until mid-December the 10% tariff on some Chinese products on many holiday-shopping lists.
By granting a grace period for everyday items like some phones and toys, the U.S. concession appears designed to avoid any disruption or additional price increases for American consumers heading into the final four months of the year - from back-to-school purchases to Christmas shopping.
The announcement also came as the two sides spoke for the first time since the recent escalation in tensions.
Stocks surged on the news Tuesday. Apple spiked 4.7% and Best Buy climbed 8% on optimism that the reprieve would boost electronics sales in the holiday season. Apparel retailers including Gap and L Brands rose, as did toy maker Hasbro and discount chain Dollar Tree.
The U.S. Trade Representative's office said in a statement Tuesday that tariffs would be delayed until Dec. 15 for items such as cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing.
"What this means is that retailers will be able to get their shipments in without the 10% tariff, which is a sigh of relief," said Poonam Goyal, a retail analyst at Bloomberg Intelligence. "It definitely saves the holiday season."
With the Sept. 1 deadline, there wasn't time for retailers to speed up ordering for the holiday season because it often takes more than four weeks for inventory to come from China, Goyal said.
While some tariffs will take effect on Sept. 1 as planned, "certain products are being removed from the tariff list based on health, safety, national security and other factors," the USTR also said.
About $250 billion of Chinese goods have already been hit by 25% duties.
David French, a spokesman for the National Retail Federation, said the organization was pleased by the delay on certain consumer goods but expressed caution.
"Continued uncertainty for U.S. businesses and consumers is a drag on the economy," he said. "What we really need is an effective strategy to address China's unfair trade practices by working with our allies instead of using unilateral tariffs that cost American jobs and hurt consumers."
Chinese Vice Premier Liu He talked with USTR Robert Lighthizer and Treasury Secretary Steven Mnuchin by phone on Tuesday, according to a statement posted on the Ministry of Commerce website. Another conference call is planned again in two weeks.
The tariff announcement came shortly after Trump insisted again that his levies were not causing higher prices for American consumers and that China was bearing the cost of them. Economists and businesses have disputed that last point.
Rick Helfenbein, president and CEO of the American Apparel & Footwear Association, called the tariffs - even with a delay - "a destructive plan."
"Make no mistake, these tariffs, including the ones imposed in earlier tranches, are paid by U.S. companies. They create costs and uncertainty, forcing companies to delay or scuttle hiring and investment decisions and ultimately hit the U.S. consumer," he said. "Rebalancing our trade partnership with China is of critical importance, but taxing U.S. companies, U.S. consumers, and the U.S. economy is not the way to achieve that goal."
The International Monetary Fund last month cited trade tensions as one of the biggest risks to the global economy as it downgraded its 2019 growth forecast, while Goldman Sachs has said there's growing concerns that the trade war will trigger a U.S. recession. A Bloomberg News August survey of economists gave a 35% probability of a recession in the next 12 months, up from 31% previously.
President Donald Trump's announcement about the new duties ended a tentative trade truce that he forged with Chinese President Xi Jinping at the end of June in Japan, just as the two sides were resuming negotiations. In the past week tensions have escalated further as the U.S. Treasury Department formally labeled China a currency manipulator.
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Bloomberg's Jonathan Roeder contributed.