WASHINGTON: President Donald Trump on Tuesday (Aug 13) backed off his plan to impose 10 per cent tariffs on remaining Chinese imports on Sep 1, delaying duties on cellphones, laptops and many other consumer goods in the hopes of blunting their impact on US holiday sales.
The move sent stocks sharply higher and drew cautious relief from retailers and technology groups.
The new tariff will, instead, be effective from Dec 15 for thousands of products including clothing and footwear, possibly buttressing the holiday selling season from some of the fallout from the protracted trade spat between the world's two largest economies.
"We're doing this for Christmas season, just in case some of the tariffs would have an impact on US customers," Trump told reporters in New Jersey. "Just in case they might have an impact on people, what we've done is we've delayed it so that they won't be relevant to the Christmas shopping season."
The US Trade Representative's Office announced the decision just minutes after China's Ministry of Commerce said Vice Premier Liu He conducted a phone call with US trade officials.
Liu agreed with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin to speak again by phone within the next two weeks, the ministry said.
Trump has said the two sides may still meet in early September as scheduled.
The delay in tariffs on a substantial portion of a US$300 billion list of remaining Chinese imports sent US stocks surging by more than 1.5 per cent after steep losses last week as the US-China trade war picture deteriorated following a drop in the value of China's yuan currency.
Shares of market bellwether Apple Inc soared 4 per cent on news that its core iPhone, tablet and laptop computer products would be spared from tariffs for the time being.
But the Trump administration still plans to impose 10 per cent tariffs on thousands of Chinese food, clothing and other consumer electronics products beginning Sep 1.
Among these are smartwatches from Apple and Fitbit , smart speakers from Amazon.com Inc , Google and Apple, and Bluetooth headphones and other devices.
The delay in imposition of the tariffs provides some relief to retailers. Although most stores would have stocked their holiday merchandise before the earlier September deadline, some might have faced the tariffs for fill-in orders late in the holiday shopping season.
Trump announced the Sep 1 tariffs less than two weeks ago, blaming China for not following through on promises to buy more American agricultural products during talks in Shanghai at the end of July.
Since Trump's Aug 1 tweets announcing the new tariffs, the US benchmark S&P stock index has dropped more than 4 per cent.
The exemptions, combined with renewed talks with China, suggest Trump may be willing to compromise.
In a sign the administration may be expecting something in return, Trump tweeted on Tuesday: "As usual, China said they were going to be buying “big” from our great American Farmers. So far they have not done what they said. Maybe this will be different!" Trump tweeted.
Other products that will have tariffs delayed until Dec 15 include "computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing," the USTR said in a statement.
The US Chamber of Commerce praised the tariff delays and said it was "more important than ever that the two sides return to the negotiating table and recommit to achieving progress towards a comprehensive, enforceable agreement."
The Retail Industry Leaders Association said "removing some products from the list and delaying additional 10 per cent tariffs on other products, such as toys, consumer electronics, apparel and footwear, until Dec 15 is welcomed news as it will mitigate some pain for consumers through the holiday season."
The 21-page-list of products that won't get hit with tariffs until December includes baby monitors and strollers, microwaves, instant print cameras, doorbells, high chairs, musical instruments, ketchup dispensers, baby diapers, fireworks, sleeping bags, nativity scenes, fishing reels, paint rollers and food products.
USTR is still moving forward with tariffs on Sep 1 on many products such as live animals, dairy products, skis, golf balls, contact lenses, motorcycle engines, lithium ion batteries, snowblowers and various types of steel. Some clothing items, including coats, mens' suits and swimwear, remain on the Sep 1 tariff list.
A separate group of products will also be exempt altogether, "based on health, safety, national security and other factors," it added.
The announcement comes amid growing concerns about a global economic slowdown. Goldman Sachs said on Sunday fears of the US-China trade war leading to a recession are increasing and Goldman no longer expects a trade deal between the two countries before the 2020 US presidential election.
Cellphones, laptop and tablet computers, toys and video game controllers were among the top four product categories in the proposed US$300 billion list of products targeted by the latest 10 per cent tariff. These products accounted for a combined US$98 billion of Chinese imports in 2018, according to a Reuters analysis of US Census bureau data.
Trump has also personally criticised Chinese President Xi Jinping for failing to do more to stem sales of the synthetic opioid fentanyl amid an opioid overdosing crisis in the United States.
The USTR office plans to conduct an exclusion process for products subject to the additional tariff.