Trump's Trade War May Be On Hold, But the Tariff Risk Lives On

(Bloomberg) -- Donald Trump brought relief to multinational companies when he put his trade war with China on pause. But the U.S. president is keeping the tariff threat tucked away in his back pocket.

Tuesday was supposed to be the day Corporate America and its lobbyists went on high alert for Trump to follow through on his plan to slap duties on at least $50 billion in Chinese imports. The U.S. Trade Representative’s office gave companies until May 22 to file written comments in response to public hearings the administration held in Washington last week.

Treasury Secretary Steven Mnuchin said on Sunday the administration agreed to put the tariffs on hold while it builds on a “framework” for negotiations with China on trade issues. That doesn’t mean they’ve been taken off the table.

“I don’t think we’re saying tariffs are over -- far from it,” said White House economic adviser Larry Kudlow. “Right now we’re in a good talking stage and we’re moving forward.”

Trump threatened tariffs on up to $150 billion in Chinese imports after U.S. Trade Representative’s office earlier this year concluded that Beijing violates American intellectual property. China vowed to retaliate in kind, sparking fear of a trade war.

301 Probe

USTR, not the Treasury Department, is overseeing the so-called 301 investigation into Chinese IP practices. U.S. Trade Representative Robert Lighthizer says that, as the 301 process continues, “the U.S. may use all of its legal tools to protect our technology through tariffs, investment restrictions and export regulations.”

“Real work still needs to be done to achieve changes in a Chinese system that facilitates forced technology transfers in order to do business in China and the theft of our companies’ intellectual property and business know how,” said Lighthizer, adding that “real structural change” is needed.

The administration never gave itself a deadline for when it would impose tariffs on Chinese goods. There’s also no date by which the 301 probe will automatically expire.

In other words, it’s far too early to declare Trump’s China tariffs a dead letter.

©2018 Bloomberg L.P.

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