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Trump administration halts tariff proposal on Chinese imports... for now

by John R. Fischer, Senior Reporter | May 25, 2018
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A proposal calling for 25 percent tariffs on imaging equipment and other electronic devices has come to a halt... for now.

U.S. Secretary of Treasury Steven Mnuchin told Fox News Sunday that the Trump administration was backing away from its threat to impose a $150 billion tax on China as the two try to hash out their differences and establish a trade agreement.

“We’re putting the trade war on hold,” Mnuchin said. “We have agreed to put the tariffs on hold while we try to execute an agreement under which China would increase its purchases of U.S. goods.”
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The tariffs were initially proposed as a retaliation against China for forcing U.S. companies to transfer technology and intellectual property in exchange for access to the Chinese market, with Trump initially proposing $50 billion in taxes on imports and later calling on U.S. trade representatives to look into another $100 billion in tariffs.

U.S. officials deemed China’s actions a violation of section 301 of the Trade Act of 1974, which authorizes the president to take any appropriate action, including retaliation, against policies of a foreign government that violate international trade agreements and restrict U.S. commerce. In response, China targeted $50 billion in American products.

Numerous manufacturers spoke out against the tariffs, arguing that a 25 percent tax on each imported item would create competitive disadvantages and exacerbate burdens already felt by steel and aluminum import taxes.

Such fees have already attracted the ire of China and other U.S. trade partners, including the EU, Russia, Japan, India and Turkey, all of which have threatened to levy a combined total of $3.45 billion in retaliatory tariffs on U.S. goods, according to Fortune.

Testifying before a Section 301 committee for the Office of the United States Trade Representative (USTR), the National Electrical Manufacturers Association (NEMA) argued that allowing the tariffs to go forward risked retaliation from China that could materially hurt U.S. companies in Chinese and global markets.

"According to U.S. government trade data, we have estimated the 2017 value of Chinese shipments to U.S.-based electrical and medical imaging manufacturers was approximately $9 billion, or slightly less than 1/5 of the entire $50 billion in imports targeted by the proposal," NEMA told HCB News. "If the 25 percent tariffs are implemented as proposed, they would represent a tax increase on U.S. manufacturers and their industrial, commercial, and residential customers valued at about $2.25 billion."

Many called on USTR to reform the proposal or seek other alternatives so as not to adversely impact hospitals, patients and taxpayers.

“Vizient respectfully requests that the Trade Representative continue working with healthcare industry stakeholders to take steps to ensure that the final list of products subject to the proposed additional duties does not adversely impact the healthcare industry, specifically the costs to our nation’s hospitals, patients, and taxpayers,” said the company in a statement.

Trump administration officials met last week with Chinese Vice Premier Liu He in talks to resolve trade disagreements, which were described as having had “very meaningful progress” by Mnuchin.

He did not confirm reports of a so-called offer by China to increase its purchases by $200 billion, and denied suggestions that backtracking of the tariffs was related to promises made by Trump to help Chinese telecom giant, ZTE.

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