FT: U.S. Businesses Warn Trump against Keeping Tariffs on Chinese Goods

Top U.S. business groups have warned President Donald Trump against keeping tariffs on Chinese goods if he reaches a trade deal with Beijing, as corporate America grows increasingly anxious that trade tensions will linger even after a pact is sealed, Financial Times reported.

In a letter to Trump on Monday, lobby organizations including representatives of U.S. retailers, oil producers, fisheries, and software companies called for the “full and immediate removal of all added tariffs” on Chinese goods in a deal, saying anything less would be a “loss for the American people.”

“American businesses and farmers . . . were promised that tariffs were merely a means to an end, and that all this damage would be worth it,” they wrote to Trump. “A deal that fails to lift tariffs would represent a broken promise to these hardworking Americans.”

Negotiations between Washington and Beijing to end their year-long trade dispute have entered their final stretch, with U.S. negotiators asking to maintain some of the $250bn in new tariffs on Chinese goods to force China to comply with any agreement. According to people briefed with the talks, the US has discussed lifting them only once China had met certain benchmarks. 

In addition, the U.S. wants the right to impose new punitive tariffs on China if it judges that China has failed to abide by the terms of the deal – in what officials are describing as an “enforcement” mechanism underlying the agreement. But this has triggered concerns among some U.S. business groups who fear that it would mean the threat of a new escalation would remain even after a deal. 

“The administration must avoid any enforcement mechanism that would trigger future tariffs and result in long-term economic uncertainty,” said the business groups, which are part of a coalition called Americans for Free Trade. They added: “We agree that enforcement must be part of a final deal. However, coming home from the bargaining table with a deal that results in perpetual tariffs would be a failure.” 

The letter from the business groups highlights the mixed feelings in corporate America about the terms of a possible deal with China, FT added.

While many want an agreement simply because it would soothe markets, others are looking at specific provisions with greater concern. Some fear Chinese concessions on big structural issues, like industrial subsidies and the theft of intellectual property, could fall short of their hopes for a big change in Beijing’s policies. Others worry that Trump will continue to dangle the threat of levies over China after the agreement, so little will be resolved on that front, either.

Meanwhile, according to Bloomberg, a deal ending the trade spat would boost container shipments of grain, wheat and soybeans, according to the head of Japan’s largest container-shipping company.

“While agricultural goods are typically transported in large volumes by bulk ships, there’s a rising trend toward using containers as they can move smaller quantities more efficiently and without the need for storage facilities,” said Jeremy Nixon, chief executive officer of Ocean Network Express Pte.

“If there is a breakthrough in the tariff situation, there’s actually pent-up demand for U.S. exports to China,” Nixon said in an interview in Singapore on April 16. A more permanent pact could lead to “a return of U.S. exports on a stronger basis to China especially on agricultural products,” he said.

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