Update on the US – China Trade War

Late on Friday, May 3, a diplomatic cable from China to Washington edited out core provisions from the 150-page draft agreement that had been the result of months of negotiations between the two countries. Instead of a signing ceremony possibly by the end of May, the US will now raise duties from 10% to 25% on $200 B of imports from China at 12:01 AM on May 10th and may apply duties to an additional $325 B that have not yet been hit with duties – essentially impacting everything the US imports from China.

The Chinese struck out provisions in the draft that would change the country’s laws and so resolve complaints about key issues alleged by the US as the reason for the trade war to begin with: theft of US intellectual property; forced transfers of technology; the unfair competitive advantage of government subsidized industries; access to financial services; and currency manipulation.

Negotiations are set to resume in Washington on May 9th, although it is unlikely that this will affect the imposition of the 25% duty on May 10th.

There are over 6000 products on the US list that will have duties increase from 10% to 25% on May 10th. These include many organic chemicals in the Harmonized System Chapter 29 and also many products in Chapter 39, which covers polymers and fabricated plastic products. Among the latter are PVC floor and wall coverings, polyethylene sacks and bags, and many products fabricated solely from plastics, such as carboys, bottles, spools, caps, stoppers, lids, tanks, vats and others.

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