After almost two months without any in-person discussion, deputies from China and the US met on September 20. No official resolution was reached, however, both parties deemed the discussions productive and agreed to continue talking. After the meeting, the US Trade Representative issued tariff exclusions on approximately 400 Chinese products. The following Monday, September 23, China purchased 600,000 tons of soybeans from the US.
On October 7, the US Department of Commerce added 28 Chinese companies to its “entity list” due to suspected human rights issues. This move essentially banned firms in the US from conducting business with these companies. Chinese officials say this move had a negative impact on the trade talks that started three days later on October 10.
But after a year and a half of bitter back-and-forth, it seems that the two countries may finally be making some progress. On October 11, Trump announced “Phase One” of a trade deal with China. Tariffs were set to increase again from 25% to 30% on 15 October, but as part of the deal, Trump agreed to put the increase on hold. In return, China has agreed to purchase $50 billion in US agricultural products.
Phase One still needs to be formally drafted and signed, but the countries are already working toward its implementation. Last week, Trump stated that Phase One of the agreement was not only on track, but “ahead of schedule” and could be signed later this month at the APEC summit in Chile. However, the summit has been called off due to political instability and strikes in Chile. Officials from the US and China resumed discussion over the phone – both countries remaining optimistic of a resolution in the near future. The phone conversation resulted in leaders agreeing to meet at the G-20 summit in Argentina in November.
Even though an official agreement has not been reached, it seems that tensions are finally starting to lessen between the US and China. However, history shows us that there is still a chance that deal will fall apart before the summit.
The trade war between the US and China has deeply impacted many of our clients. Fortunately, tariffs did not increase as planned in October. However, there has been no discussion of how Phase One will impact any current tariffs, or the increases that are set for December. As the future is still uncertain, Blacksmith remains committed to helping you find the best solutions for your supply chain during this difficult time. To find a solution for your product business, contact us here.