President Trump has temporarily paused a provision that imposed tariffs on low-cost Chinese products, allowing them to enter the US tariff-free for now. The decision reverses a previous executive order and has sparked confusion among retailers and shippers.
Trump Allows Low-Cost Chinese Products to Enter U.S. Without Tariffs, for Now
The president temporarily paused a provision that had imposed tariffs on many packages sent from China beginning this week and that had sowed confusion among retailers and shippers.
China has emerged as a major player in global trade, with its exports and imports playing a significant role in the world economy.
In 2020, China's total trade value reached $4.56 trillion, making it the 'world's largest trading nation' .
The country's trade is driven by its vast population, skilled workforce, and strategic location.
China's main export products include electronics, textiles, machinery, and furniture, while its main import products are energy resources, raw materials, and consumer goods.
Changes in Trade Loophole
President Trump signed an executive order on Friday that will temporarily allow low-cost products from China to continue coming into the United States tariff-free. This decision reverses, at least for now, a decision he made last Saturday when he signed an executive order eliminating so-called de minimis treatment for goods from China.
Wielding an Economic Weapon
The de minimis rule had allowed products under $800 to come into the United States without being subject to tariffs and with less information given to customs. This change, which went into effect Tuesday, meant that hundreds of thousands of packages coming into the United States each day from China were suddenly subjected to tariffs and requirements for much more information.
Small Businesses’ Concerns
The swift change sowed confusion among retailers and shippers. Many sellers on e-commerce platforms were taken by surprise. The U.S. Postal Service temporarily stopped accepting packages from China on Wednesday, though by Thursday morning it said it would once again accept them.
What Does Trump Want?
In the order Friday, the president said that de minimis treatment would continue to be available for goods from China for now, but would cease once the secretary of commerce notified him that systems had been put ‘in place to fully and expediently process and collect tariff revenue.’ Timothy Brightbill, a trade attorney at Wiley Rein, said that the order ‘appears to concede, at least for now, that the United States does not have the systems in place it would need to collect tariffs on the enormous and growing number of de minimis shipments each year from China.’
China has signed numerous trade agreements with countries and regions to boost its global trade.
The Belt and Road Initiative (BRI) is a flagship program aimed at enhancing connectivity and cooperation between participating nations.
China also participates in the Regional Comprehensive Economic Partnership (RCEP), the world's largest free-trade agreement, which covers 30% of global trade.
Additionally, China has signed trade agreements with countries such as Australia, Chile, and Peru.
These agreements have led to significant increases in Chinese exports and foreign investment.
Tariffs and Retaliation
The Trump administration imposed an additional 10 percent tariff on all imports from China beginning Tuesday, arguing that the country had not done enough to stop shipments of fentanyl into the United States. Mr. Trump had threatened 25 percent tariffs on goods from Canada and Mexico, but decided to postpone those for a month after negotiating with those governments. China responded to the tariffs with its own retaliatory measures, including tariffs that are set to go into effect next Monday.
The Trump administration introduced several notable policies during its tenure from 2017 to 2021.
The Tax Cuts and Jobs Act (2017) reduced corporate tax rates and increased standard deductions for individuals.
The Trump administration also implemented a travel ban targeting predominantly Muslim countries, which was upheld by the Supreme Court in 2018.
Furthermore, the administration withdrew from several international agreements, including the Paris Climate Accord and the Iran nuclear deal.
Additionally, it rolled back various environmental regulations, such as the Clean Power Plan and net neutrality rules.
