Dec 2, 2019

Wilbur Ross says December tariff hike likely without China breakthrough

Commcerce Secretary Wilbur Ross during a cabinet meeting on Oct. 21. Photo: Alex Wong/Getty Images

Commerce Secretary Wilbur Ross said Monday on Fox Business that time is running out for the U.S. and China to agree on a trade deal before Dec. 15, when the U.S. is set to impose an additional 15% tariff on around $156 billion worth of Chinese goods.

Why it matters: Future tariff hikes would likely further squeeze the U.S. and Chinese economies, dragging down already declining business investment in the U.S. and possibly pushing the manufacturing industry into a deeper recession.

  • China reported last quarter that its economic growth fell to its slowest pace since the 1st quarter of 1992. A report released Monday shows the U.S. manufacturing sector contracted for the fourth consecutive month.

What he's saying: “If nothing happens between now and then, the president has made quite clear he’ll put the tariffs in — the increased tariffs, Ross said.

  • Ross said December is a "really good time" to add more tariffs because he claims it wouldn't "interfere with this year’s Christmas," since many retailers have already stocked up.
  • "We have a very strong economy and [the Chinese] have lots of problems," Ross added.

Our thought bubble, via Axios' Dion Rabouin: The negative impacts of Trump's trade war are already being felt by American businesses. As we've reported, big retailers are forcing their small suppliers to absorb the cost of tariffs and small business hiring has taken a major hit, along with hiring in the retail and manufacturing sectors.

The big picture: One of Beijing’s priorities in talks has been removing existing U.S. tariffs on Chinese goods. Increasing tariffs on Chinese goods would further complicate any hope for an agreement.

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The state of play: The deal averts a new round of tariffs scheduled to go into effect on Dec. 15, and a Chinese official said that the U.S. would reduce its tariffs on Chinese goods in stages, per Bloomberg. The deal includes an agreement from China to increase imports from the U.S. and purchase agricultural goods.

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White House considering tariffs of up to 100% on $2.4B of French goods

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The Office of the U.S. Trade Representative announced on Monday that it is considering tariffs as high as 100% on up to $2.4 billion worth of French products, following an investigation that concluded France's digital tax "discriminates against U.S. digital companies, such as Google, Apple, Facebook, and Amazon."

Why it matters: The proposal underscores the administration's willingness to expand the scope of President Trump's trade war beyond just China and use tariffs as a weapon to retaliate against other countries. It was announced around the same time that Trump landed in London for a NATO summit, where he will come face to face with French President Emmanuel Macron.

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