TAR­IFFS

Baltimore Sun - - FROM PAGE ONE -

lap­tops, video game con­soles, some toys, com­puter mon­i­tors, shoes and cloth­ing.

The ad­min­is­tra­tion is also re­mov­ing other items from the tar­iff list en­tirely, based on what it called “health, safety, na­tional se­cu­rity and other fac­tors.”

Sep­a­rately, China’s Min­istry of Com­merce re­ported that top Chi­nese ne­go­tia­tors had spo­ken by phone with their U.S. coun­ter­parts, Trade Rep­re­sen­ta­tive Robert Lighthizer and Treasury Sec­re­tary Steven Mnuchin, and planned to talk again in two weeks.

The news sent the Dow Jones In­dus­trial Av­er­age soar­ing be­fore it set­tled up 373 points Tues­day. Shares of Ap­ple, Mat­tel and shoe brand Steve Mad­den, which stand to ben­e­fit from the de­layed tar­iffs, led the rally.

Trump, speak­ing to re­porters in New Jersey, con­firmed that he had de­cided to de­lay the tar­iffs, which could force re­tail­ers to raise prices, to avoid the eco­nomic pain that could re­sult dur­ing the hol­i­day pe­riod.

“We’re do­ing (it) just for Christ­mas sea­son, just in case some of the tar­iffs could have an im­pact,” Trump said.

Trump has re­peat­edly ar­gued that his tar­iffs are hurt­ing China, not Amer­i­can con­sumers. But by de­lay­ing higher tar­iffs on con­sumer goods, Trump is tac­itly ac­knowl­edg­ing that his im­port taxes stand to squeeze Amer­i­can house­holds too.

Tar­iffs are taxes paid by U.S. im­porters, not by China, and are of­ten passed along to U.S. busi­nesses and con­sumers through higher prices.

Jay Fore­man, CEO of the toy com­pany Ba­sic Fun, said he’s pleased that the 10% tar­iffs have been de­layed for prod­ucts like his un­til De­cem­ber.

His com­pany, based in Boca Ra­ton, Florida, had al­ready set prices for the hol­i­day sea­son and would have had to ab­sorb the im­pact of the tar­iffs. Fore­man said he is con­sid­er­ing lay­offs this fall to off­set his higher costs and noted that de­spite Trump’s re­prieve, tar­iffs re­main a se­vere threat.

“We were re­lieved,” he said. “But does that stop the volatil­ity and in­sta­bil­ity? No.”

To­gether, the news of ne­go­ti­a­tions and tar­iff de­lays pro­vided at least a respite after weeks of height­ened U.S.-China trade ten­sions. The re­lief might prove only tem­po­rary, though, if the tar­iffs even­tu­ally take full ef­fect and Bei­jing re­tal­i­ates against U.S. ex­ports.

The Trump ad­min­is­tra­tion is fight­ing the Chi­nese regime over al­le­ga­tions that Bei­jing steals trade se­crets, forces for­eign com­pa­nies to hand over tech­nol­ogy and un­fairly sub­si­dizes its own firms.

Those tac­tics are part of Bei­jing’s drive to be­come a world leader in such ad­vanced tech­nolo­gies as ar­ti­fi­cial in­tel­li­gence and elec­tric cars.

But 12 rounds of talks have failed pro­duce any res­o­lu­tion. Frus­trated with the lack of progress, Trump raised the tar­iffs on $200 bil­lion in Chi­nese im­ports from 10% to 25% in May and said Aug. 1 that he’d im­pose 10% taxes on an ad­di­tional $300 bil­lion on Sept. 1.

On Sun­day, econ­o­mists at Goldman Sachs down­graded their eco­nomic fore­casts, cit­ing the im­pend­ing tar­iffs on con­sumer goods. And econ­o­mists at Bank of Amer­ica Mer­rill Lynch have raised their odds of a re­ces­sion in the next year to roughly 33%, up from about 20%.

“We are wor­ried,” Michelle Meyer, head of eco­nom­ics at Bank of Amer­ica Mer­rill Lynch, wrote Fri­day. “We now have a num­ber of early in­di­ca­tors start­ing to sig­nal height­ened risk of re­ces­sion.”

Goldman said the tar­iffs on China have in­creased un­cer­tainty for busi­nesses, which will likely cause them to pull back on hir­ing and in­vest­ing in new equip­ment or soft­ware. Trump’s tar­iffs on Chi­nese goods have also weighed down stock prices, which could de­press spend­ing by wealth­ier Amer­i­cans, Goldman found.

“It’s pretty clear that the prob­lem with (Trump’s) tar­iff tac­tics is it’s bad for the economy,” said David Dol­lar, a China spe­cial­ist at the Brook­ings In­sti­tu­tion and a for­mer of­fi­cial at the World Bank and U.S. then you get blow­back on your own peo­ple.”

RICHARD DREW/AP

Spe­cial­ists James De­naro, left, and An­thony Ri­naldi watch stocks on the floor Tues­day.

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