- President Donald Trump was swift to assert the US has made “very substantial” progress on trade with China last week.
- But American businesses and investors saw little refuge ahead from a 19-month tariff dispute between the largest economies.
- The agreement was “subject to documentation” and could still result in tariff increases in December, Treasury Secretary Steve Mnuchin said Monday.
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Faced with a formal impeachment inquiry ahead of his reelection bid, President Donald Trump was swift to assert the US has made “very substantial” progress on trade with China last week. But American businesses and investors saw little refuge ahead from a 19-month tariff dispute between the largest economies.
The White House announced on Friday that China would increase agricultural purchases, pursue unspecified changes to its currency and intellectual property rules, and open up access to financial services markets. In return, the US postponed tariff increases that had previously been scheduled to take place this week.
Yet those agreements have not been put on paper by either side. Early Monday, Treasury Secretary Steve Mnuchin confirmed the preliminary pact was “subject to documentation” and that the US could still follow through with plans to slap additional import taxes on virtually all imports from China in December.
“I have every expectation that if there’s not a deal, those tariffs would go in place,” Mnuchin said on CNBC. “But I expect there will be a deal.”
That threat has left a thick cloud of uncertainty over the outlook for businesses and investors. Financial markets retreated at the US open Monday as questions over the agreement emerged.
“US businesses will continue to struggle under the burden of tariffs and uncertainty in supply chains,” said Gary Shapiro, president and chief executive of the Consumer Technology Association. “American businesses thrive when they can dedicate their time and resources to innovating and competing globally, not checking Twitter for trade policy updates.”
Trump attempted to tout particular progress for the farmers who helped elect him in 2016, saying it was “the greatest and biggest deal ever made for our Great Patriot Farmers in the history of our Country.” While most welcomed the announcement that China would buy more farm goods, they remained skeptical after months of similar pledges.
Brian Kuehl, the co-executive director of the bipartisan coalition Farmers for Free Trade, said specifics on the timeline and prices of planned purchases were unclear.
“While the stock market may celebrate, farmers in Wisconsin, Minnesota, Texas and elsewhere will still wake up facing double-digit tariffs into one of America’s largest export markets,” Kuehl said.
Other details remained similarly elusive. Both sides saw a need for rules around how the preliminary agreement would be enforced in the first phase, Mnuchin said early Monday. But asked about the specifics of a potential dispute resolution mechanism, he demurred.
“I know you want the specifics of the chapter, and I’m not going to go through it,” he said. “It will have an enforcement mechanism that we can enforce and that we’re comfortable with.”