Trump has rolled over to Chinese pressure following fears of an escalating trade war.
The president had called for tariffs on a variety of Chinese imports, including toys, computer monitors, and cell phones. This was despite economists concerns that a trade war with China could potentially result in a recession, with Trump's trade policy being the main cause.
Yet now, the Office of United States Trade Representatives has issued a statement, saying that the tariffs are going to be delayed until December 15th.
“Certain products are being removed from the tariff list based on health, safety, national security and other factors and will not face additional tariffs,” the USTR's statement read, adding that a full list of the exempted products will be released by Tuesday.
The USTR's statement comes following China's retaliation against Trump by weakening the yuan and delaying trade imports, which resulted in a poor week on Wall Street. Semiconductors and several big US bank stocks, including Bank of America, JP Morgan, and Citigroup all declined sharply in the stock market.
China's actions clearly had a political motive. Cowen's managing director Chris Kreuger referred to China's retaliation as an “11 out of 10”, and stated that : “While there were measures that could have been chosen with larger direct effects on supply chains, the announcements from Beijing represent a direct shot at the White House and seem designed for maximum political impact. We expect a quick (and possibly intemperate) response from the White House, and consequently expect a more rapid escalation of trade tensions.”
Kreuger was correct. Trump took to twitter to condemn China's decision, saying: “China dropped the price of their currency to an almost a historic low. It’s called ‘currency manipulation.’ Are you listening Federal Reserve? This is a major violation which will greatly weaken China over time!”
Yet despite this, it seems for now that the White House has decided to ease up on China for now. Time (and Twitter) will only tell where Trump's trade war goes next.