Is the U.S. & China Trade War Really Cooling Down?

Is the U.S. & China Trade War Really Cooling Down?


It (tentatively) looks like it. On Friday, October 11th, President Trump announced that the tariff increase set to go into effect October 15th will be delayed, after the United States and China reached what Trump calls “a very substantial Phase 1 deal.”

What's Going On

As of August 23rd, China responded to the United States’ tariff increase plan by imposing a tariff increase of their own. According to China’s Minister of Finance, a 5% or 10% tariff increase, depending on the type of good, will go into effect September 1st on approximately $75 billion of American-made imports. China also announced that there would be a second round of tariff increases starting December 15th, including a reinstatement of the tariff on automobiles and parts from the United States.

In response, President Trump and the Office of the United States Trade Representative have announced that the previous tariffs on List 1, 2, 3, 4a, and 4b will increase again—and the September 1st deadline will stay in place. What does that mean? On Sunday, the previously announced tariff of 10% on list 4a will actually go into effect at 15%. The other tariffs will also increase by 5% at their respective deadlines—list 1, 2, and 3 tariffs currently at 25% will go to 30% on October 1st, while list 4b tariffs slated for December 15th will increase from 10% to 15%.

On Sunday, the products on list 4a, including cotton and wool socks, will be affected by a 15% tariff instead of a 10% tariff. While the products on list 4b are slated to receive the same increase on December 15th, that number isn’t set in stone, as the United States and China seem to be in a stage of escalation, leading into proposed negotiations next month.

Need a handy way to remember what will be affected? Take a look at these charts.

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