NAFTA
NAFTA went into effect in
1994.
Annual Trade Numbers (in billion $$):
According to U.S. Census Bureau and Statistics Canada,
Annual
* Export from U.S. to Canada: 246
* Import from Canada to U.S.: 255
* Export from U.S. to Mexico:212 (from TX $92.5)
* Import from Mexico to U.S.: 271 (to TX $84)
* Export from Canada to Mexico: 6
* Export from Mexico to Canada:14
NAFTA Trucking Rule
On October 21, 2011, first fleet of Mexican trucks entered into interior parts of the USA, almost 11-and-1/2 years after the originally scheduled timeline. Under NAFTA, signed in 1994, Mexican trucks would have access to highways in border states by 1995 and full access to all U.S. highways by January 2000. However, until now, Mexican trucks have seldom gotten access to beyond a border buffer zone. During George W. Bush's administration, a limited number of the Mexican trucking companies were allowed to participate in a pilot program that had allowed access to U.S. interior. After Barack Obama was elected, the pilot program was cancelled in 2009. The Mexican government responded by imposing $2 billion worth of tariff on 99 U.S. imports, including Christmas trees, onions, oranges, apples, juice concentrates, toothpaste, deodorant and sunglasses. Mexico reduced the tariff after signing the trucking agreement with the USA in July 2011, and removed altogether on October 21, 2011. At present 11 Mexican trucking companies are going through the certification process.
******************************** NAFTA RENEGOTIATION ***********************
NAFTA Renegotiation Begins
U.S., Canadian and Mexican officials on August 16, 2017 launched the renegotiation process of NAFTA at Washington, D.C. U.S.T.R. Robert Lighthizer is leading the U.S. officials.
First Round Concludes with Promise of Follow-up Rounds, Quick Wrap-up
Cognizant of national elections in Mexico and the United States next year, the five-day (August 16-20, 2017), first round of NAFTA talks concluded on August 20, 2017 at Washington, D.C. with a joint communique that stressed on upgrading the agreement by establishing the "21st century standards to the benefit of our citizens". The press statement also called for an accelerated and comprehensive negotiation process. The second-round will be held in Mexico between Sep 1-5, 2017, and the following round will then move to Canada for a late September 2017 session.
Third Round of NAFTA Re-Negotiation Talks Concludes without Thorny Issues
The third-round of NAFTA re-negotiation talks concluded on September 27, 2017, and during this round, U.S.T.R. Robert Lighthizer apparently did not even introduce some of the contentious topics that Trump administration had been fretting over. The third round, held in the Canadian capital of Ottawa, dealt and made significant progress on issues such as competition policy, digital trade, state-owned enterprises and telecommunications, according to Canadian Foreign Minister Chrystia Freeland. One of the contentious topics is NAFTA's Chapter 19 that calls for an arbitration panel to mediate any dispute among parties that Washington came to despise, but Canada and Mexico favored it. Another contentious topic is related to "local content-rules", and Trump administration was in favor of tightening the rules to ban any product from outside the region to have label "made in North America" just because it is assembled in Mexico. The fourth-round will be held in Washington D.C. October 11-15, 2017.
Sixth Round of NAFTA Re-negotiation Ends without any Concrete Results
Sixth round of talks on revising current version of NAFTA ended on February 2, 2018 at Washington without yielding any tangible results. The seventh round of NAFTA re-negotiation will begin at the end of February 2018.
Trump Pushes for Sunset Clause
President Donald Trump's June 8, 2018, bilateral session with Canadian Prime Minister Justin Trudeau at the Quebec resort town of La Malbaie, venue of G-7 summit, covered NAFTA and his insistence on putting a five-year sunset clause as part of renewal of the landmark trade deal involving U.S., Canada and Mexico. Trump on June 9, 2018 told correspondents before heading out to Singapore for a landmark summit with North Korean leader Kim Jung Un that his meeting with Trudeau on NAFTA renewal went really well. However, Trump did not forget to issue a stern warning that if he found the NAFTA not to be working in favor of U.S., he would tear up the deal and instead go for separate deals with Mexico and Canada.
Canada, U.S. Reach NAFTA Renewal Deal a Month after U.S. and Mexico Agreed
A frenetic series of talks between officials from Ottawa and Washington reached an agreement late September 30, 2018, hours before October 1, 2018 deadline, to resuscitate the flagging NAFTA and put it on track. Trump administration and Mexico reached a deal in August 2018 to renew NAFTA with some significant tweaks, and threatened to put the deal in effect without Canada if no agreement was reached with Ottawa by September 30, 2018. Under the deal with Canada, U.S. dairy will have less restrictive trade barriers in getting access to lucrative markets in the north while Trump administration dropped its earlier insistence that a dispute resolution panel be scrapped. For the time being, the automobile tariffs imposed by both nations will continue. Among the biggest tweaks done to NAFTA were provisions that included:
* A revision of sunset clause proposed by Trump administration
* Auto parts to be allowed for duty free shipment across the borders should have a larger percentage to be made in the high-wage factories
President Hails the new NAFTA
President Donald Trump said at the Rose Garden on October 1, 2018 that the U.S.-Mexico-Canada Agreement, or USMCA, will close "many deficiencies and mistakes" of NAFTA. Although Trump gave the trilateral deal a new name, to many it's still NAFTA.
NAFTA Replacement Deal Signed on the Sidelines of G-20 Summit at Buenos Aires
Leaders of the USA, Canada and Mexico signed a landmark agreement on November 30, 2018 on the sidelines of G-20 summit at Buenos Aires that would replace the quarter century-old NAFTA, pilloried by Donald Trump as the worst trade agreement in the U.S. history. The agreement signed by Donald Trump, Justin Trudeau and outgoing Mexican President Enrique Pena Nieto is called the U.S.-Mexico-Canada Agreement, or USMCA. NAFTA will continue to be effective until legislatures in three countries ratify the USMCA.
******************************** NAFTA RENEGOTIATION ***********************
Trump Delays Tariffs on Auto, Lifts Metal Tariffs
In pursuit to sway Congress to approve U.S.-Mexico-Canada Agreement, or USMCA, renegotiated version of NAFTA, Trump administration tried its latest trick to appear bold while indirectly sending conciliatory message to Congress as Trump administration announced on May 17, 2019 two key trade-related declarations made hours apart:
* It will delay for up to six months the imposition of tariffs on the imports of autos and auto parts from Mexico and Canada
* It will lift tariffs on steel and aluminum imports from Canada and Mexico effective May 19, 2019
In June 2018, Trump administration leveraged an obscure trade clause, Section 232 of the Trade Expansion Act of 1962, allowing the Commerce department to take steps in the interest of national security to impose tariffs on steel and aluminum imports from Canada ($14 billion) and Mexico ($3.5 billion). Canada will also lift the punitive tariffs imposed as a retaliation on $13 billion in U.S. imports. However, the tariffs on auto and auto parts will have much more devastating impact as U.S. imported $192 billion in vehicles and $159 billion in auto parts from its neighbors.
Trump Threatens to Impose Tariffs on Mexican Imports
President Donald Trump on May 30, 2019 pulled the trigger of tariff in a shocking way and surprising rationale that he would impose 5 percent tariff on Mexican imports beginning June 10, 2019 unless Mexico didn't take appropriate measures to prevent Central American migrants from coming to the U.S. President Donald Trump's threat has come with a tweet, reflecting the cavalier way he mixes foreign policy, trade policy and immigration policy. Trump didn't stop at 5 percent tariff. He went beyond that threatening to impose incremental tariffs every month up to 25 percent. The threat has thrown the newly minted NAFTA, formally called the U.S.-Mexico-Canada Agreement, or USMCA, in limbo as it awaits Senate ratification. As of 2018, U.S. has imported $346.5 billion in goods from Mexico while exporting $265 billion in goods. Many experts are having hard time how immigration and trade are getting messed up in a volatile political atmosphere.
Mexican President Andres Manuel Lopez Obrador tried to defuse the escalation on May 31, 2019, ordering his Foreign Minister Marcelo Ebrard to head to Washington next week to hold talks with U.S. Secretary of State Mike Pompeo.
Deal Reached to Avert Tariffs on Mexican Imports; Business Chamber Warns against Traiffs
A long-drawn grueling talk helped avert a trade disaster as negotiators from USA and Mexico were able to reach an agreement on June 7, 2019 to limit the foot traffic of migrants heading northward through Mexico. U.S. President Donald Trump tweeted on June 7, 2019, saying that the tariffs were "indefinitely suspended". Hours before the agreement was reached, U.S. Chamber of Commerce issued a statement on June 7, 2019 on behalf of more than 140 business and agricultural bodies, warning Trump administration of the "harm" that tariffs would do to "U.S. consumers, workers, farmers and businesses of all sizes across all sectors".
The June 7, 2019, agreement between Mexico and the U.S. is more like a compromise of what each nation wants, with more tilt in favor of the U.S. demand. Under the deal,
* Mexico will deploy about 6,000 newly created National Guards troops in the southern border with Guatemala to prevent Central American migrants crossing into Mexico
* Trump administration gets the buy-in from AMLO administration to expand Migrant Protection Protocol that will force migrants to stay on the Mexican soil while their asylum cases will go through the U.S. immigration system
* Trump administration concedes and now will not insist on the "safe third country" issue that requires Central American migrants to request for refugee status in Mexico before filing asylum to the U.S. authorities
The lead architect of the agreement on the Mexican side, Foreign Minister Marcelo Ebrard, expressed satisfaction for averting the tariffs on Mexican imports. President Andres Manuel Lopez Obrador was ebullient too, calling for a victory rally at Tijuana on June 9, 2019. The rally was originally billed as protest rally to decry U.S. effort to impose tariffs on Mexican imports.
Questions on Tariff Avoidance Deal Linger
As both Donald Trump and Andres Manuel Lopez Obrador took victory laps on June 8, 2019, there were several questions on both sides of the borders what actually this deal was all about. The deal was overwhelmingly focused on the enforcement component while a scant few sentences were spared in a jointly issued statement to drive home the point that there were more work to be done to promote growth, security and development in the Northern Triangle--Guatemala, Honduras and El Salvador. For Mexico, deployment of 6,000 National Guards troops to control migration was anything but normal. However, the Interior Secretary Olga Sanchez Codero said that the [deployment] plan was all the way in the planning stage even before the tariff threats were issued. The central element to creation of Mexican National Guards was to provide security to Mexican people, and President Andres Manuel Lopez Obrador had presented the concept to Congress in March 2019 as such. It was never presented as a border security apparatus, and therefore, lacks training and expertise to perform border security tasks.
Another key element of the June 7, 2019, Mexico-U.S. deal is the expansion of Migration Protection Protocol to require asylum seekers to stay in Mexico while their cases would be processed in the U.S. The program has been rolled out in California and El Paso, and as of today, 10,393 were returned to Mexico since the Migration Protection Protocol had been launched in January 2019. Currently most of the returnees are being taken care of by the Catholic Church, and if the programs is completely rolled out along the border, nobody is sure how Mexico is going to cope up with the surging population who are going to stay in Mexico for indefinite time.
President
Barack Obama had to shelve joining an important trade negotiation that covers almost 40 percent of the world trade because of the first federal government shutdown in 17 years. Instead Secretary of State John Kerry will pitch in on behalf of President Obama in the
Trans-Pacific Partnership talks to be held in
Bali, Indonesia on October 8 and October 9, 2013. The 12-nation TPP talks will be held in the aftermath of 21-nation APEC (
Asian-Pacific Economic Co-operation) ministerial-level meeting that has ended on
October 5, 2013. TPP bloc is looking for not only eliminating the tariff to the goods and services, but also smoothing the trade rules for non-tariff trades. New Zealand
PM John Key will lead the
October 8-9, 2013 trade talks in absence of Obama.
TPP includes (1) Australia, (2) Brunei, (3) Canada, (4) Chile, (5) Japan, (6) Malaysia, (7) Mexico, (8) New Zealand, (9) Peru, (10) Singapore, (11) the USA and (12) Vietnam.
On
October 9, 2013, the epicenter of Pacific politics shifted from Bali to Brunei as the
Association of Southeast Asian Nations summit had begun at Bandar Seri Begawan. US Secretary of State
John Kerry will fill in on behalf of President Obama in both the
ASEAN summit as well as to-be-followed
East Asian Summit, that will also be hosted in Brunei.
House Provides Renewed Push to President's Fast-Track Authority
After torpedoing a measure last week that would renew president's fast-track authority, under which Congress may either vote up or down a trade treaty, but can't change it,
House of Representatives on
June 18, 2015 has approved a measure that will renew president's
Trade Promotion Authority as negotiations over
Trans-Pacific Partnership get more intense in the coming months. In a twist of fate, President Obama's landmark trade agenda is being fought against tooth and nail by organized labor, liberals and environmentalists, his one-time trusted constituency. On the other hand, Congressional Republicans, who have made opposition to President Barack Obama on almost every issue a rallying cry, are lining up to provide the necessary support to his trade agenda. 28 Democratic House members balked the partisan pressure to join the majority Republicans to approve the
TPA measure by
218-208 vote.
Senate Votes to Give President "Fast-Track" Authority
Senate Republicans, often odd with
President Obama on almost all issues since the very beginning of his administration, on
June 23, 2015 presented him with a legacy-setting legislative victory by renewing the
Trade Promotion Authority under which President Obama could
fast-track Trans-Pacific Partnership talks and sign an agreement that Congress could only vote up or down, but not amend it. The
June 23, 2015, procedural vote in the Senate was
60-37. The Senate needs to vote the measure one more time to send it to President Obama's desk. Senate has three more related trade bills to work on, including
Trade Adjustment Assistance (TAA) meant to provide help and re-training to American workers impacted by trade deals.
Senate Sends the First-Track Authority Bill to President
Twelve days after House Democrats torpedoed the presidential fast-track authority in a vote on
June 12, 2015 by voting down their close-to-heart measure
TAA, Senate Republican leadership made a strategic adjustment to the measure by splitting
TPA from
TAA, and went ahead to pass the
TPA first. A day after the procedural vote, the Senate on
June 24, 2015 passed the "fast-track authority", which Obama's predecessors had enjoyed, by 60 to 38 vote. The measure now goes to President for his signature. Under the fast-track authority, Obama administration will negotiate the possible
Trans-Pacific Partnership deal that Congress can only vote up or down, but not change it.
House Votes for Trade Adjustment Authority Measure; Renews African Growth Measure
After sending the "fast-track" authority measure to
President Barack Obama, Congressional action on
June 25, 2015 reverted to the House as lawmakers voted
286-138 to renew the job retraining program for displaced workers because of trade deals. Republican lawmakers also voted in drove to support the job training measure, contradicting their historical stand in the past. Another landmark legislative piece that got approved on
June 25, 2015 by the House was renewal of
African Growth and Opportunity Act.
Trans-Pacific Partnership Agreement Reached
After marathon round of talks at Atlanta, trade representatives from 12 Pacific rim countries on
October 5, 2015 reached a landmark agreement after 5 years of often intense and bickering negotiation that would create the world's largest free-trade zone encompassing 40 percent of global economy. The deal will eliminate tariff on more than 18,000 products exported by American manufacturers, and cut taxes assessed on imports. Lauding the deal, President Barack Obama said on
October 5, 2015 that when 95 percent of the customers lived outside the USA, it would be naïve to give China the leverage to write trade rules by not passing a landmark agreement as
Trans-Pacific Partnership agreement. The U.S. Trade Representative
Michael Froman too chimed in on
October 5, 2015, saying that the deal was different from previous trade agreements as it had incorporated workers' safeguards, environmental protection and fair labor rules. In addition to the USA, the partnership includes (1) Australia, (2) Brunei, (3) Canada, (4) Chile, (5) Japan, (6) Malaysia, (7) Mexico, (8) New Zealand, (9) Peru, (10) Singapore and (11)Vietnam. Each nation has to ratify the deal. In the USA, Obama administration has to give Congress 90-day notice and lawmakers 60-day timeline before signing the deal.
President Trump Signs Executive Order to Withdraw from TPP
Making good on his campaign promise,
President Donald Trump on
January 23, 2017 signed an Executive Order, setting in motion a process to withdraw from the TPP.
TPP Agreement's Name Gets Changed
Trade ministers of the 11 of 21-nation APEC bloc on November 11, 2017 re-committed to the free trade and commerce as enshrined in the Trans Pacific Agreement, but rechristened the accord to Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPATPP).
CPATPP Signed san USA
Trade ministers from 11 Pacific Rim nations--Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam--that account for 13 percent of global economy signed a sweeping trade deal, Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPATPP), a re-christened version of TPP that President Donald Trump had led the U.S. to withdraw last year, on March 8, 2018 at Santiago, Chile that would provide 500 million people with opportunities and prosperity based on what Japanese Economy Minister Toshimitsu Motegi had described as "free and fair 21st century rules in the Asia-Pacific region"
TRUMP'S TARIFF PROPOSAL
Trump to Impose Tariff
Delivering one of the key campaign promises, President Donald Trump on March 1, 2018 said at a hastily arranged conference with industry executives that his administration would impose 25 percent tariff on steel imports and 10 percent tariff on aluminum imports.
Allies Rile at Trump's Tariff Proposal
A day after President Trump proposed 25 percent tariff on steel import, and 10 percent tariff on aluminum imports, the reaction from U.S. allies was swift and caustic. John Weeks, Canada's chief NAFTA negotiator, said during the day that Trump's tariff proposal was not looked upon favorably by Canadians. China and EU were more blunt as they said that billions of dollars of U.S. imports would be slapped with tariff too. The prime targets include Kentucky bourbon and Haley-Davidson motorcycle which has plant in Speaker Paul Ryan's Wisconsin.
Tariff War Likely to be Fueled by Sabre Rattling
Undeterred by forceful response by allies, U.S. President Donald Trump upped the ante on March 3, 2018 in the tariff war of words, tweeting that he would like to impose tariff on European auto imports. Currently, U.S. imposes 2.5 percent tariff on imported cars and a 25 percent tariff on the imports of foreign trucks and commercial vans. European Union slaps a tariff of 10 percent on U.S. exports of cars.
Trump Signs Tariff Orders
Defying warnings from home and abroad, President Donald Trump went ahead on March 9, 2018 to sign orders to impose 25 percent tariffs on steel imports and 10 percent tariffs on aluminum imports although carving out exemptions for Canada and Mexico as NAFTA re-negotiation was undergoing. The new tariff regime will go into effect in 15 days.
Last Minute Exemptions Granted to Several Nations in Aluminum and Steel Tariffs
As 25 percent tariffs on steel imports and 10 percent on aluminum imports were about to take hold on March 23, 2018, Trump administration carved out several nations for exemption and targeted mostly Chinese imports. Last minute exclusions included E.U., Brazil, South Korea, Canada and Mexico. The exemption will be effective till May 31, 2018 by which the allies have to come up with remediation steps although no one knows what those will be. Australia may be added to the exemption list soon.
Trump Vows to Stop Chinese Pilfering of U.S. Proprietary Asset; Impose Tariff
After imposing 25 percent tariffs on steel imports and 10 percent on aluminum imports--although making a last-minute carve-out for E.U., Brazil, South Korea and Mexico--that would go into effect on March 23, 2018, U.S. President Donald Trump trained his eyes on China, especially for doing too little to discourage the theft of American technology and intellectual asset. Trump on March 23, 2018 vowed to impose tariffs on at least 1,300 Chinese imports to the tune of $60 billion. Trump ordered U.S. Trade Representative Robert Lighthizer to compile the list of Chinese imports within 15 days. Reacting to a fear of prolonged trade war between the world's largest two economies, DOW tumbled 724 points during the day. However, the March 22, 2018, concession came with a caveat for those nations: they have until May 1, 2018 to come up with a satisfactory deals with the U.S.
Trump Scores a Trade Victory with a One-on-One Deal with South Korea
The New York Times reported on March 27, 2018 that a one-on-one negotiation-driven trade deal with South Korea would be announced on March 28, 2018, reflecting President Donald Trump's proclivity toward negotiating and notching up deals with individual nations instead of multilateral trade deals that had become norm in recent years. The reported South Korea-U.S. trade deal, among others, calls for:
* Opening the South's market for U.S. car manufacturers such as General Motors and Ford
* Extending tariffs to South Korean truck exports
* Limiting the South Korean steel exports to two-third of the current volume
China Announces Imposition of Tariffs on more than 100 U.S. Imports
Plunging the bilateral relations between China and the U.S., Chinese authorities on April 2, 2018 announced imposition of tariffs on $3 billion in U.S. imports, covering more than 100 items. 25 percent tariffs will be imposed on aluminum and pork imports, while a 15 percent tariff will be imposed fruits, nuts, wine, herbs and pipes. The U.S. stock markets were roiled during the day after China had announced imposition of tariff, with Standard and Poor's 500 Index dropping 2.23 percent and undergoing the so-called market correction. The April 2, 2018, Chinese action to impose tariffs on $3 billion in U.S. imports was in response to Trump administration's recent decision to impose tariffs on steel and aluminum imports from China.
China's Tariff List Includes Items that Texas Banks on for Exports
On April 3, 2018, Trump administration laid out a detailed list of about 1,300 Chinese imports to the tune of $50 billion that would be slapped with tariff as part of penalties on $50 billion in Chinese imports. Not to be left behind, China on April 4, 2018 unveiled its own list of items as part of its tariff penalty of 25 percent on $50 billion in U.S. imports. Many of the items are the core of Texas' agro-economy such as soybeans. China had also targeted small aircraft imported from the U.S. In addition to soybeans and small aircraft, the list includes beef, whiskey, passenger vehicles and chemicals. This list of $50 billion in U.S. imports that China had targeted for 25 percent tariffs was separate from the list unveiled on April 2, 2018 when Beijing slapped another 25 percent tariff on additional $3 billion in imports.
Trump Dials up Pressure, Orders USTR for Tariffs on Additional $100 billion in Chinese Imports
Never known for lying low, President Donald Trump on April 5, 2018 upped the ante in the looming trade conflict with China, ordering the U.S. Trade Representative Robert Lighthizer to create an additional list of $100 billion in Chinese imports for slapping tariffs.
Tariffs to be Imposed on Canadian, Mexican, EU Imports
As no breakthrough was possible during the exemption period, now 25 percent tariff on steel imports and 10 percent on aluminum imports will be slapped on Mexico, Canada and EU on June 1, 2018, dialing up the pressure on USA's allies days before a crucial G-7 Summit in Quebec, Canada.
Mexico Hits Back with Its Own Tariff
In a trade retaliatory measure, Mexico on
June 5, 2018 imposed tariffs on
$3 billion of U.S. exports, targeting many of the items made, or grown, in Texas. The items upon which Mexican tariffs are to be imposed include whiskey, cheese, pork and other goods, making good on the promise that it will hit back for Trump administration's tariffs on steel and aluminum imports.
Meanwhile, in another twist of trade talks among Canada, Mexico and the USA over renewing NAFTA, President Trump's chief economic adviser,
Larry Kudlow, speaking on
Fox and Friend, said on
June 5, 2018 that the president now favored a country-country trade deal instead of tri-lateral NAFTA.
Trump Notches up Trade War with China
Trump administration on
June 15, 2018 went ahead full throat to impose tariff on
$50 billion in Chinese imports to deter what Trump called in a tweet a system that's "very unfair, for a very long time". The initial list that was drawn in
April 2018 was refined and published by the Office of the U.S. Trade Representative. Under the tariff plan that involves a total of
1,102 categories of Chinese imports,
25 percent tariff will be imposed on
$34 billion of Chinese imports drawn from the
April 2018 list, while the
$16 billion of new imports items have been identified. Tariffs on the first $34 billion of Chinese imports will go into effect
July 6, 2018, while the remaining
$16 billion of Chinese imports targeted will go through additional review. In retaliation, Chinese Commerce Ministry announced that it would also slap tariffs on U.S. imports in two phases. First phase of
$34 billion in imports, including automobiles, seafood and agricultural products, will be targeted for tariff the day U.S. will impose the tariff on the first batch of Chinese products. The second targeted batch of
$16 billion will be subject to further review, according to Chinese Commerce Ministry.
Trump Orders U.S.T.R to Make an Additional List of $200 billion Chinese Imports for Tariff
Escalating the trade war with China by several notches,
Donald Trump on
June 18, 2018 night ordered his
Trade Representative Robert Lighthizer to draw an additional list of
$200 billion Chinese imports for
10 percent tariff on the top of
$50 billion imports that would be subjected to
25 percent tariff effective
July 6, 2018. However, China's retaliatory tariffs have deeper implication on Texas exports. 60 percent of U.S. soybean exports go to China, and a large share of them is shipped by Texas. Also, the U.S. tariff penalty may have two-edged sword: U.S. companies have invested a cumulative $256 billion in China since 1990 vs. Chinese companies $140 billion in the U.S, according to
Rhodium Group research firm and
National Committee on U.S.-China Relations. To cope with tariff battle, U.S. companies will pass the cost of tariffs on imports to American consumers, while Chinese companies with the investment in the U.S. will slow down the hiring.
Trump's Tariff Raises Questions beyond Economics
As
The Dallas Morning News has carried a report on
June 28, 2018 on the implication of tariff battle between U.S. and other nations, there are numerous questions on how and why Trump administration is using the so-called national security concern under
Section 232 of the Trade Expansion Act of 1962. The provision allows the president to bypass Congress altogether and impose sanctions on the violating nations.
Tariff Battle Begins with China
Trump administration's steep tariff of
25 percent on
$34 billion Chinese imports went effective on
July 6, 2018, with Beijing hitting back with dollar-for-dollar tariff retaliation that had targeted soybean and sorghum exports from Texas. On
July 5, 2018, a day before the new tariff regime on
$34 billion in Chinese imports went into effect,
President Donald Trump threatened to slap tariff on all of the Chinese imports, i.e., nearly
$500 billion in Chinese imports, a scenario that would have catastrophic impact on global economy and companies such as Wisconsin-based
Husco International, which makes parts for Ford, General Motors, Caterpillar and John Deere, already suffering under the current punitive tariff regime would be disproportionately affected.
$12 billion Aid Package Announced for American Farmers
To help American farmers wither tariffs from China and other nations, Trump administration on
July 24, 2018 announced a
$12 billion aid package under a Depression-era program, called
Commodity Credit Corporation, to help reduce the pain from the counter-tariffs. Announcing the aid, to be effective beginning in
September 2018,
Agriculture Secretary Sonny Perdue said that "other nations can not bully our agricultural producers to force the United States to cave in". Trump administration does not need Congressional approval for this aid package as Commodity Credit Corporation can borrow up to $30 billion from the Treasury Department without Congressional mandate.
U.S.T.R. Publishes $16 billion in Chinese Imports to be Subjected to Tariff
The office of the
U.S. Trade Representative on August 7, 2018 published a list of
279 Chinese products, down from original list of
284 items, to be slapped with
25 percent of tariff effective
August 23, 2018. The U.S. already imposed
25 percent tariff on
$34 billion in Chinese imports effective
July 6, 2018 that drew an immediate in-kind retaliation from Beijing. The $16 billion additional Chinese imports to be hit by 25 percent tariff effective
August 23, 2018 will surely be matched by dollar-by-dollar counter-tariff. In addition, U.S.T.R. is reviewing option to slap 10 percent tariff on an additional
$200 billion in Chinese imports.
Tariffs Become Effective on $16 billion in Imports
As planned,
$16 billion in additional Chinese imports were subjected to tariff effective
August 23, 2018. China responded with a tit-for-tat measure.
Trump Announces 10 Percent Tariff on Additional $200 billion in Chinese Imports
Trump administration on
September 17, 2018 announced a
10 percent tariff on
$200 billion in Chinese imports. This time the consequences of the tariffs will be felt across the board as a vast number of consumer goods and daily essentials will be impacted. China didn't sit idle, and the following day,
September 18, 2018, announced a tit-for-tat
10 percent tariffs on
$60 billion in U.S. exports.
President Donald Trump, reacting to Chinese counteraction, threatened to impose tariffs on all of Chinese imports.
90-day Truce in Trade War Announced
U.S. President Donald Trump and Chinese President Xi Jinping headlined a high-octane dinner diplomacy on
December 1, 2018 night at
Buenos Aires on the sideline of G-20 summit. At the steak dinner, both sides agreed to a 90-day truce in deteriorating trade war between world's two largest economies. Under the deal, Trump administration will not increase the tariffs on
$200 billion in Chinese imports from the current
10 percent to
25 percent effective
January 1, 2019. China will reciprocate by buying an additional, unknown amount of U.S. goods and services. China will also label fentanyl as a "controlled substance" as a humanitarian gesture. Both nations will use the 90-day period to close their gap.
Trade Talks Begin Beijing
As the
March 2, 2019, deadline looms large for another bout of trade tariff on
$200 billion in Chinese imports slated to be increased from the current level of
10 percent to 25 percent, trade negotiation between Chinese and American officials has begun on
February 14, 2019 at Beijing.
U.S.T.R. Robert Lighthizer is leading the U.S. delegation, while the Chinese negotiators are led by the Vice Prime Minister
Liu He.
Trade Talks Shift to Washington
After making what
U.S. Trade Representative Robert Lighthizer said "some headway" in Beijing last week, U.S. negotiators and their Chinese counterparts resumed negotiation at Washington on
February 19, 2019 amid optimism that President Donald Trump would extend the deadline for reaching a trade deal with China by March 1, 2019 to avoid an increase in tariff rom 10 percent to 25 percent on $200 billion in Chinese imports. On February 21, 2019, the mid-level negotiation will be amped up by participation of key Cabinet officials from both nations. On the U.S. side,
Robert Lighthizer,
Treasury Secretary Steven Mnuchin and
Commerce Secretary Wilbur Ross are expected to join with
China's trade point-person,
Liu He, a vice premier and confidant of President Xi Jinping.
Trump Extends China Tariff Deadline
President Donald Trump on February 24, 2019 declared that the threatened tariff hike from
10 percent to 25 percent on $200 billion in Chinese imports would be delayed as there was substantial progress during the weekend talks between Chinese and U.S. trade negotiators in Washington. Trump's
February 24, 2019, tweet helped set aside another trade battle with China for the time being as the
March 2, 2019 12:01AM, deadline loomed large and trade talks in Washington had been extended. The trade talks focused on various items of U.S. concern such as opening the Chinese markets for U.S. products, U.S. trademark and intellectual property protection and other issues of national security.
T
rade Talks to Resume in China in the Third Week of March 2019
According to several reports based on White House information on
March 19, 2019, trade talks between China and the U.S. will resume next week.
U.S.T.R. Robert Lighthizer will lead the U.S. delegation in Beijing in the next week's talks.
Trump Threatens to Slap Tariffs on Chinese Imports
U.S. President Donald Trump on May 5, 2019 blamed Chinese negotiators for not making enough progress in the ongoing trade talks and threatened to increase tariffs from
10 percent to
25 percent on $200 billion of
Chinese imports. The
May 5, 2019, Trump tweet surprised trade experts and business interests of the both nation as the consequences of such action could be unimaginable harm to the respective economies and global stock market. President Trump deferred tariff increase twice in the past,
January and
March 2019. The new tariffs are to go into effect at
12:01AM on May 10, 2019. What's concerning more is Trump's threat to go after an additional
$325 billion in Chinese imports which were not currently covered by the present tariff regime. That will definitely entail a precipitous decline in equity markets and may likely down-spiral global economy.
China Stays Stubborn, Lays out Conditions for a Trade Deal with USA
The day tariffs on
$100 billion in Chinese imports were increased from
10 percent to 25 percent, China laid out clear terms for a negotiated trade deal with the Trump administration. As trade negotiation wound down in Washington D.C. on
May 10, 2019, China's chief trade negotiator and
Vice Premier Liu He said that U.S. should remove all tariffs in the first place, set a rational quota for China for imported goods from the USA in line with the demand and accord "dignity" to Beijing before a meaningful trade deal could be signed.
China Retaliates with its Own Tariffs
China on
May 13, 2019 slapped tariffs in the range of
5 percent to 25 percent tariffs on a diverse portfolio of about
5,200 American imports with a price tag of
$60 billion, leading the U.S. stock markets into tailspin. The tariffs will be effective on
June 1, 2019. Although Trump administration announced last year to give American farmers
$11 billion in aid to mitigate the sufferings stemming from the Chinese decision to impose tariffs last summer, the new trade war could be catastrophic for both the world's largest two economies.
Oxford Economics estimated that higher tariffs would lower the U.S. economic growth by
0.3 percent, an equivalent of $490 per household.
Trump Announces $16 billion Aid for U.S. Farmers
To help American farmers overcome the hardship stemming from America's great trade war, Trump administration on
May 23, 2019 announced
$16 billion in aid to American farmers. The
$16 billion farm aid came on the top of
$12 billion in aid that Trump administration had announced in July 2018.
Trump Administration Puts a Hold on Tariffs on Chinese Exports
When Trump administration increased tariffs on
$200 billion in Chinese imports in
May 2019 from
10% to 25%, it had also issued a dire warning to go after the remaining
$300 billion in Chinese imports and slap 10% tariffs effective
September 1, 2019. Given the softening of the economy and not so stellar back-to-school retail outlook, the
United States Trade Representative's Office on August 13, 2019 said that it would delay imposing
10% tariff on
$300 billion in Chinese imports from
September 1, 2019 to December 15, 2019.
Trade Tiff Torpedoes Stock Market; Trump Calls Powell "Enemy"
The
August 23, 2019 turned out to be an extraordinary day in the history of trade war as the day began unravelling with Chinese announcement of imposing
5% and 10% tariffs on $75 billion in the U.S. imports--to be effective
September 1, 2019 and
December 1, 2019--in retaliation to earlier U.S. tariffs. An enraged Trump took to twitter on
August 23, 2019 to blast the Chinese decision and said that he would raise planned tariffs on
$300 billion in Chinese imports from
10% to 15%. President Trump also ordered the U.S. companies with operations in China to find alternative nations to do business, not explaining what had meant. He doubled down his frustration by unloading his ire on
Feds Chairman Jerome Powell, calling him out with an unprecedented name-calling, "enemy", for raising the interest rates. Trump administration's Trade Representative's Office said that it would raise the existing tariffs from
25% to 30% on $250 billion in Chinese imports beginning
October 1, 2019.
However, the most lucrative part of Trump's ire was the tweet that had American companies "are hereby ordered to immediately start looking for an alternative to China". Trump has even backed up his order to American companies to look for alternative to China by referring to the
Emergency Economic Powers Act of 1977, an act that gives the president a wide leeway to control the international commerce during national emergency although experts don't consider the current situation as anywhere near to national emergency.
A Timeline of Trump Trade War
* January 22, 2018: Trump administration okays tariffs on $8.5 billion in solar import panels and $1.8 billion in washing machines
* March 23, 2018: Trump administration implements tariffs on $48 billion in steel and aluminum imports, but exempts key allies
* April 2, 2018: China retaliates with its own tariffs on $2.4 billion in U.S. imports
* June 1, 2018: Trump ends metal tariff exemptions for Canada, Mexico and EU
* June 5, 2018: Mexico retaliates with levies on $3 billion in imported U.S. goods
* June 22, 2018: EU retaliates with import tariffs on $3.2 billion in U.S. imports
* July 1, 2018: Canada hits back with its own tariffs on $12 billion in U.S. imports
* July 6, 2018: Trump implements tariffs on $34 billion in Chinese imports over Chinese trade practices and China retaliates with tariffs on $34 billion in U.S. imports
* August 23, 2018: Trump imposes tariffs on $16 billion in Chinese imports and China hits back with same scale of punitive measure
* September 24, 2018: Trump implements tariffs on $200 billion in Chinese imports and China retaliates with tariffs on $60 billion in U.S. imports
* May 10, 2019: Trump implements the tariff increase from 10 percent to 25 percent on $200 billion in Chinese imports, and China follows suit with tariffs on $60 billion in U.S. imports
* May 19, 2019: Trump removes tariffs on aluminum and steel from Canada and Mexico, and both nations withdraw retaliatory tariffs
* June 7, 2019: Trump backs down on imposing tariffs on all Mexican imports after Mexico agrees to take measures to prevent migrant flow to the U.S.
* Aug 23, 2019: Trump declares new tariffs on China with new, phased-in timeline
******************************* U.S.-CHINA PHASE I TRADE AGREEMENT
U.S., China Agree on Phase I Agreement
U.S. and China agreed to not imposing upcoming tariffs on each other's imports as what President Donald Trump had called a "Phase I" agreement. The October 12, 2019, preliminary agreement calls for delaying imposition of U.S. tariffs on Chinese imports in exchange of China's commitment to buy up to an additional $50 billion in U.S. farm goods. As the 13th round of U.S.-China trade talks are being held in Beijing, a Chinese Commerce Ministry spokesman, Gao Feng, said on November 7, 2019 that a "phased cancellation" of tariffs should be the goal.
Trump Approves Phase I of the Trade Deal
Averting a disaster, U.S. President Donald Trump on December 12, 2019 approved the so called Phase I of U.S.-China trade agreement. Under the deal, China will import $50 billion in U.S. farm products. In exchange, U.S. will not impose new tariffs on $160 billion in Chinese imports and existing tariffs on $360 billion in additional Chinese imports will be reduced. However, the more controversial issues over Chinese practices of pressuring U.S. technology companies to hand over the technological knowhow if they want to do business in China and widespread U.S. intellectual property theft will be pushed forward to some other days in future. The Phase I of the trade deal will be signed in days to come.
Trump Lauds Phase 1 Deal; Gives Tariff Reliefs to Chinese Imports
U.S. President Donald Trump tweeted on December 13, 2019, calling out the victory that he had scored for American manufacturers and farmers as Beijing would make "massive" purchases as part of Phase 1 trade agreement between China and U.S. Trump also iterated that he would not levy a proposed new tariffs on $160 billion in Chinese imports and reduce tariffs from 15 percent to 7.5 percent on $112 billion in Chinese imports.
China Drops Tariff Threat against U.S. Imports
The December 13, 2019, Phase I trade agreement between the U.S. and China is a step in the right direction as China stated on December 15, 2019 that it would not slap a 25% tariff on the auto imports from the U.S., making the total tariff to 40% on auto imports.
******************************* U.S.-CHINA PHASE I TRADE AGREEMENT
U.S. Imposes Tariffs on European Imports as part of WTO Verdict
As World Trade Organization ruled in favor of the U.S. in a key case involving European subsidy to Airbus, U.S. imposed a $7.5 billion in tariff in European goods effective October 18, 2019. However, there is a twist to this: first, a 10% levy will be imposed on airplanes from Europe. If that's not going to add up to $7.5 billion, which is the case here, a myriad of European imports, including cheese, wine and others, will be subjected to punitive tariffs.
Trump Announces $20 billion Aid to Farmers to Mitigate Trade War Fallout
President Donald Trump on November 27, 2019 bypassed Congress and leveraged a 1940s era law that had been used by previous administrations to provide farm reliefs during the Dust Bowl and Great Depression era to announce a $20 billion package to soften the blowback on his very reliable constituency, American farmers, because of trade tiff. However, the package ranges as little as $2 to individual farmers and as high as $1 million to corporate enterprises.
Trump Declares Imposition of Tariffs on Argentina, Brazil, France
An early morning tweet on December 2, 2019 woke the global business and trade community up with U.S. President Donald Trump announcing steep tariffs on aluminum and steel imports from Latin America's two of the largest economies--Brazil and Argentina--to punish them for currency devaluation. President Trump also announced up to 100% tariffs on French imports to respond French tax on U.S. tech companies.
Hours later, U.S. Trade Representative Robert Lighthizer released the findings of a five-month investigation into France's digital taxes that had hurt the U.S.-based companies and must be responded by up to 100% tariffs on $2.4 billion in French imports such as yogurt, cheese, sparkling wine and makeup. At issue is so called "GAFA Tax", or Google-Apple-Facebook-Amazon tax, a 3% tax that French government imposed on the U.S.-based digital companies last year as they were deemed to be paying much less tax for the revenue generated from the French consumers.
As far as two Mercosur nations are concerned, Brazil's economy barely grew in the past year, increasing a meager 0.2%, and its central bank had cut interest rates three times since August 2019. Argentinian economy is faring even worse.
Donald Trump, on the other hand, provided $28 billion in farm relief to counter tariff effect, effectively doling out almost twice the taxpayer money given to the struggling automakers at the peak of Great Recession.
U.S., France Détente on Tariff War
On the sideline of World Economic Forum in Davos, French Finance Minister Bruno Le Maire worked out a compromise with U.S. Treasure Secretary Steve Mnuchin on tariffs and a 3% French tax on U.S. technology companies' revenue generated in France. Bruno said on January 22, 2020 at Davos that under the compromise, France would delay collecting the 3% tax until December 2020 and U.S. would hold off imposing tariffs on French imports.
***************************************
RCEP ************************************
World’s
Largest Trading Bloc Formed
After
rounds of some intense negotiations originally aimed at bringing the world’s 3.6
billion people under a singular trade umbrella, 15 nations on November
15, 2020 signed an agreement to establish the world’s largest trading bloc,
Regional Comprehensive Economic Partnership, or RCEP. The agreement was
signed virtually on the sidelines of ASEAN Summit in Vietnam. The 15-nation
RCEP consists of 10 nations from Association of Southeast Asian Nations—Cambodia,
Indonesia, Laos, Myanmar, the Philippines, Thailand, Brunei, Singapore,
Malaysia and Vietnam—plus five other nations: China, Japan, South Korea,
Australia and New Zealand. Vietnam’s Prime Minister Nguyen Xuan Phuc
lauded the hard work of last eight years to produce the “largest free
trade agreement of the world”. Japan’s prime minister, Yoshihide Suga, congratulated
the nations for “broadening the free and fair economic zone, including a
possibility of India’s future return” to RCEP. India had to withdraw from RCEP negotiation
under intense internal opposition, but still RCEP remained the largest trading
bloc with 2 billion people under its umbrella.
***************************************
RCEP ************************************
U.S. Outlines Negotiating Objectives for Indo-Pacific Economic Framework
The Office of U.S. Trade Representative on September 23, 2022 unveiled negotiating objectives for the 12-nation Indo-Pacific Economic Framework. The U.S. deal with IPEF has been launched in May 2022. IPEF includes Australia, Japan, South Korea, Brunei, Fiji, Indonesia, Malaysia, New Zealand, Philippines, Singapore, Thailand, and Vietnam. Collectively, Indo-Pacific Economic Framework controls 40% of global economy. Although many observers see the Indo-Pacific Economic Framework as an alternative to TPP, U.S. doesn't see it that way.
U.S. to Impose Tariffs on Chinese EVs, Other Imports
Biden administration on May 14, 2024 announced that it would impose tariffs on electric vehicles, solar cells, advanced batteries, steel, aluminum and medical equipment imported from China. As President Joe Biden is facing tremendous headwind in his rematch with Former President Donald Trump, the move is seen to make Biden look tough on China. Chinese Foreign Ministry decried the tariff plan, saying it would vitiate the bilateral trade relationship.
