Washington Update

The Trump administration took the first step this week to place new duties on products temporarily exempted from US reciprocal tariffs unveiled on April 2. President Donald Trump last weekend announced exemptions for a wide range of electronics, including smartphones and semiconductor manufacturing equipment, offering a reprieve from tariff rates as high as 195%.

President Donald Trump on Wednesday declared a 90-day pause on reciprocal tariffs for all countries except China, increasing China’s rate to 125%. Added to the 20% tariffs imposed last month to address fentanyl concerns, these new duties bring the overall punitive US tariff rate imposed on Chinese goods this year to 145%.

President Donald Trump on Wednesday unveiled his reciprocal tariff plan, which imposes a 10% baseline tariff on most countries and much higher tariffs on certain trading partners, including a 34% rate for China that will go into effect at midnight on April 9.

President Donald Trump suggested this week that next week’s reciprocal tariff announcement may be more narrow than first portrayed. He noted that the tariffs will “be more lenient than reciprocal,” with some exceptions and the possibility that not all tariffs will be announced on April 2.

Nearly two weeks since the White House raised the baseline tariff rate on Chinese imports by an additional 10%, US-China diplomatic activity remains in a holding pattern as both governments firm up their respective trade policy agendas.

President Donald Trump on Tuesday followed through on his threat to increase the baseline tariff rate on all Chinese products from 10% to 20%, effective immediately. The announcement cites China’s inaction to stop the flow of fentanyl precursor chemicals to North America. The administration has not indicated plans for an exclusion process.

The White House last Friday announced the America First Investment Policy, a national security-focused presidential memorandum that promotes investments from allies while restricting investments from adversaries, notably China.

China on Tuesday announced new tariffs and export controls in response to the United States imposing a 10 percent tariff, on top of existing tariffs, on all Chinese imports. Despite speculation that President Donald Trump and President Xi Jinping would speak by phone this week and potentially ease their respective tariff rulemakings, a call has not taken place and Trump indicated on Tuesday that he was “in no hurry” to do so.

President Donald Trump’s Cabinet is aligned on a need for more tariffs, though the administration has yet to outline exactly when and how to do so, including determining which products and countries to target, as well as how high to set the duties. White House Press Secretary Karoline Leavitt indicated this week that Trump plans to levy tariffs on Mexico and Canada on February 1 and that he is still “considering” imposing a 10 percent tariff on all Chinese goods on the same day.

President Donald Trump opted not to raise tariffs on China during the first week of his administration. Instead, he on Monday issued a regulatory freeze and directed executive department heads to review all new rules published under the Biden administration that have not taken effect, a move that could halt several rules with operational impacts for USCBC member companies.  The White House also issued a trade policy memorandum later that evening directing federal agencies, primarily the Department of Commerce, Treasury, and the Office of the US Trade Representative, to conduct a top-to-bottom review of US trade policy.