Trump grants tariff exemptions to plastic straws, dog leashes and more from China

Finance

U.S. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer arrive for a group photo session after a meeting with Chinese Vice Premier Liu He in Beijing on May 1, 2019.

Andy Wong | AFP | Getty Images

BEIJING — The U.S. is temporarily exempting more than 400 types of Chinese products from tariffs that President Donald Trump‘s administration imposed last year, CNBC has confirmed.

That’s according to three documents set to be published on Friday by the Office of the U.S. Trade Representative. The news was first reported by Politico.

The exclusions include things like Christmas tree lights, plastic straws, dog leashes and printed circuit boards, for a total of 437 types of products. They are part of the $250 billion worth of Chinese goods that the U.S. hit with tariffs last year. It was not immediately clear how large a portion of the overall tariffs is covered by the exclusions.

The exemptions stem from more than 1,100 exclusion requests made by companies and other entities in the United States, according to the documents.

This doesn’t seem to be an immediate shift in US trade policy … It’s more in consideration of the trade war impact on the domestic U.S. economy than a concession to China.

Nick Marro

The Economist Intelligence Unit

The world’s two largest economies have been locked in an escalating trade dispute for more than a year, in which both sides have levied tariffs on the other’s goods. The release of the exemptions comes as mid-level U.S. and Chinese government officials meet in Washington in preparation for high-level talks expected in October.

“The latest exemptions are a tacit acknowledgement by the US of the damage being done to domestic interests by the imposition of tariffs,” Stephen Olson, research fellow at the Hinrich Foundation, said in an email.

“The timing however is interesting,” he said. “It suggests that both sides have determined that further escalations are not desirable right now, so they are trying to create positive atmospherics before the October round of negotiations, in the hopes that those talks will at least forestall any further deterioration,” said Olson.

The documents lay out three sets of exclusions:

  • One set based on the Sept. 24, 2018, implementation of tariffs on $200 billion worth of goods. This exemption will expire on Aug. 7, 2020.
  • Another based on the Aug. 23, 2018, implementation of tariffs on $16 billion worth of goods. This exemption will expire one year from the publication of the notice, at this time next year.
  • The other set of exclusions is based on tariffs on $34 billion worth of goods that took effect July 6, 2018. This exemption will also expire this time next year.

Last week, China’s Ministry of Finance announced it would exempt 16 U.S. product lines from tariffs. Trump subsequently said he would delay increasing tariffs on $250 billion worth of Chinese goods by two weeks, to Oct. 15.

China’s Ministry of Commerce, Ministry of Finance and Ministry of Foreign Affairs did not immediately respond to CNBC’s request for comment.

“This doesn’t seem to be an immediate shift in US trade policy, as the US had previously offered some type of tariff exemptions to qualified US goods,“ Nick Marro, global trade lead at The Economist Intelligence Unit, said in an email.

“It’s more in consideration of the trade war impact on the domestic US economy than a concession to China, but this could still help build some goodwill before the trade talks in October,” he said, noting that protests in Hong Kong and tensions around China’s Huawei still threaten any sort of agreement.

The Trump administration has put Chinese telecommunications giant Huawei on a blacklist that effectively prevents U.S. suppliers from selling to the firm. Beijing, for its part, has threatened the announcement of its own “unreliable entities list.”

The Trump administration initially focused on reducing the large U.S. trade deficit with China, but the disagreement has expanded to U.S. companies’ complaints about limited access to the domestic Chinese market and being forced to hand over proprietary technology to China.

Companies in both U.S. and China can apply with the respective governments for exemptions from tariffs.

Other items the Trump administration is set to free from tariffs include:

  • A kind of paper filter for single-cup coffee brewing systems
  • Dog harnesses and retractable dog leashes
  • A certain kind of laminated wood flooring panel
  • Steel wire barbecue grills
  • Printed circuit assemblies for enhancing graphics performance of automatic data processing machines
  • Refrigerated and heated vending machines for dispensing live bait and fishing tackle
  • Aluminum radiators for motor vehicles
  • Miniature lighting sets for Christmas trees
  • Garden, patio and tabletop wick-burning torches for outdoor use
  • Plastic drinking straws
  • Certain electric-powered skateboards and motorcycles
  • Indoor tabletop water fountains
  • Pet water drinking fountains
  • Parts of swimming pool vacuum cleaners
  • Electronic scales for continuous weighing of quartz, powder and resin on conveyors
  • Animal feeding machinery

WATCH: How do tariffs work?

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