March 1 deadline for China tariffs may slide if deal is near

U.S. President Donald Trump indicated that he may be flexible on the March 1 deadline for raising tariffs on Chinese imports if the two sides are close to reaching a deal.  If no deal is made, the current 10 percent tariff on $200 billion of Chinese imports will rise to 25 percent.

Trump announces U.S. tariff increase scheduled for Mar. 1 will be delayed

Update 2/25/19:  In a pair of tweets over the weekend, U.S. President Donald Trump announced that he will be delaying the implementation of increased tariffs on $200 billion worth of Chinese goods, citing that "substantial progress" has been made in trade talks between the two nations.

Trump also said that, assuming progress continues, they will be planning a summit at Mar-a-Lago for Chinese President Xi Jinping and himself "to conclude an agreement."  However, he gave no details on when this summit would occur, or if there will be a new tariff deadline.

March 1 China trade deal deadline may slide

As negotiations between the U.S. and China continue, Trump remained optimistic and suggested that he would be open to extending the March 1 deadline for increasing tariffs if the two nations are near an agreement.

"Things are going well with China. China wants to make a deal very badly," Trump told reporters at a cabinet meeting at the White House on Feb 12.  

“We have $267 billion that we were very nice about and we’re not taxing," Trump said. “The 10 percent on $200 billion goes up to 25 percent on March 1st. And so far, I’ve said don’t do that. Now, if we’re close to a deal where we think we can make a real deal, and it’s going to get done, I could see myself letting that slide for a little while. But generally speaking, I’m not inclined."

Trump: I want a real deal with China

"I want it to be a real deal, not just a deal that makes -- you know, cosmetically looks good for a year. We have a chance to really make a deal -- a real deal with China. We’ve never been in this position before," Trump said.

What does a real deal include?   Trump has vowed that the agreement needs to address the full range of U.S. complaints, including forced technology transfer, intellectual property rights, cyber theft, agriculture, services, non-tariff barriers, and currency. 

The administration also seeks to secure binding commitments from the Chinese for deeper economic reforms over short-term promises to buy more American products. 

Trump's comments are a good indication that he is willing to give the Chinese more time to firm up a deal, and extending the deadline could pave the way for a possible deal-clinching meeting with Xi Jinping, reported Bloomberg. 

Meetings with Chinese President Xi Jinping

While there are no formal plans yet for a meeting, Trump has said that he expects the two leaders will need to talk in person to finalize the details.

“At some point I expect to meet with President Xi,” Trump said, “and make the parts of the deal that the group is unable to make happen. That’s the way deals happen.”

Chinese President Xi Jinping met with U.S. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer as a good will gesture for the trade talks prior to their meeting at the Great Hall of the People in Beijing on February 15.

Lighthizer reportedly told Xi that the two sides had “made headway on very, very important and difficult issues.”

“We have additional work we have to do but we are hopeful,” Lighthizer said.

Both U.S. officials were in Beijing continuing discussions with Chinese Vice Premier Liu He.  Mnuchin told reporters outside of his hotel that he was encouraged and hopeful that the conversations would be productive

The focus of the talks?  Likely a draft of an agreement between the two countries that could be signed by Trump and Xi at a later date. 

“I have said many times that China and the United States are inseparable from each other. Cooperation serves the interests of the two sides and conflict can only hurt both,” Chinese President Xi said of the ongoing negotiations. “The consultations between the two teams have made important progress.”

What to expect in the near future

Analysts in Washington predict that the talks will likely continue for 60 days past the March 1 deadline.  If no deal is made, the current 10 percent tariff on $200 billion of Chinese imports will rise to 25 percent.

As the March 1 deadline looms, we will continue to follow developments in these negotiations to determine when and if the 10% tariffs will rise.  

If you haven't done so already, be sure to subscribe to our Market Updates email newsletter so you don't miss these important updates!  You can fill out the form on the right, or click here to subscribe.