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            november 13, 2019

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Structural issues not dealt with in latest US-China tariff deal: USCBC official


The vice-president of the US-China Business Council (USCBC), Matthew Margulies, has described the latest move by US President Donald Trump to postpone further tariff increases on imports from China as a "skinny-mini" deal, but one that could "arrest some of the frictions in the US-China relationship hopefully by mid-November".
The US President last week announced the tariff postponement as well as a deal to sell US$40 billion to $50 billion of US agriculture products to China.
"If the question is 'deal or no deal', I think the answer to both is yes," said Mr Margulies, speaking recently at the Western Cargo Conference (WESCCON) of the Pacific Coast Council (PCC) in Rancho Mirage, California.
The USCBC is made up of five organisations that represent freight forwarders and customs house brokers on the West Coast.
"Yes, we have a partial deal that is going to delay or remove a tariff rate increase for some imports. But yes, there is also no deal, because essentially the key elements that sparked the trade war and the structural issues in China's economy really have not been addressed at all," he said.
"Long term, the tensions still persist, the tariffs are still in place." These include tariffs on a new group of products that are scheduled to go into effect on December 15.
Mr Trump announced on October 11 the US will keep the 25 per cent tariff on Chinese products imported into the US on lists 1, 2, and 3 instead of raising the rate to 30 per cent on October 15. The value of those products is estimated to be about $250 million.
The US is also keeping in place a 15 per cent tariff that went into effect on September 1 on the Chinese imports on list 4A. Mr Margulies estimated those imports had a value of about $120 billion.
The USCBC has about 220 members, all of which are US companies and view China as a "priority market"; 80 per cent say US-China tensions are having a tangible impact on their operations, but few plan to leave China, reports New York's FreightWaves.
Mr Margulies said a survey of its members found 90 per cent plan to remain in China, but added some businesses may delay expansion or new investment. He said most of the council's members are in China to sell in China, not to use the country as an export base to sell back into the US.
"We are probably going to continue to live in a world where we have to expect some degree of tariffs on imports from China for the foreseeable future," he said. Regardless of who wins the election next November, "the US-China relationship has really deteriorated from its high three to five years ago and I don't really see a course correction even if we were to achieve some semblance of a strong trade deal."

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