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Trump is delaying tariffs on some Chinese products in a temporary trade war ceasefire

Get your toys and video games before the holidays!

China’s Foreign Trade Up 4.1% In First Five Months
A China Railway Express Co. Ltd. shipping container is lifted at a freight station of Chongqing-Xinjiang-Europe International Railway on July 8, 2019 in Chongqing, China.
Deng Liangkui/VCG via Getty Images

Two weeks ago, President Donald Trump vowed to impose tariffs on pretty much every single product China sells in the United States. But on Tuesday, his administration reversed course by delaying penalties on some of the more high-profile products — essentially calling a temporary and minimal ceasefire in the years-long US-China trade war.

Washington had planned to place a 10 percent tax on $300 billion in Chinese goods starting September 1, including toys, clothing, shoes, and consumer electronics like iPhones. That would’ve added to the 25 percent tariffs on $250 billion worth of other Chinese products Trump announced in May. Together, that would put US restrictions on nearly all of Beijing’s exports to America.

That plan was just scrapped, according to the US Trade Representative, the office that leads America’s side of the trade negotiations with China. “Certain products are being removed from the tariff list based on health, safety, national security, and other factors and will not face additional tariffs of 10 percent,” the office said in a statement, adding that products like cell phones, laptops, and even sneakers won’t face any penalties for now. Those tariffs will now be delayed until December 15.

The news boosted US stocks, particularly in the industries exempted until the end of the year. The S&P 500, one of the best indicators of the stock market’s overall health, rose 2 percent in just the first hour after the announcement. Best Buy, the electronics store that imports many of its products from China, went up 8 percent on its own.

Why did the US delay the tariffs on Chinese products?

It’s not exactly clear why this decision came now, so close to when the original announcement was made. One possibility is that the Trump administration wants China to follow through on its promise to buy more US agricultural products. Beijing hasn’t followed through on that yet, so perhaps the US is offering a gesture of goodwill to show that it hopes to continue negotiating with China in good faith.

It’s also possible that makers of video games, toys, and other items lobbied the Trump administration to delay the action so it wouldn’t hurt their holiday and back-to-school sales. By giving companies a few months to import these products at no extra cost, they can ensure they’ll be fully stocked for the busy shopping season.

This may all be short-term good news for American retailers and consumers, but the core problem remains: The US and China are far from signing a final trade deal, which means the trade war is likely to continue well into the future. Until that massive undertaking is completed, billions of people in China and America will be affected by tariffs on thousands of products they all enjoy.