On December 1, during a working dinner meeting in Buenos Aires following the G20 Summit, U.S. President Donald J. Trump and Chinese President Xi Jinping agreed to temporarily ease trade tensions as both sides continue negotiating over longer-term solutions to U.S. concerns about bilateral economic relations.

According to a White House press release, for a 90-day period, the U.S. will maintain the 10 percent tariffs on its list of $200 billion in Chinese imports, postponing an anticipated January 1, 2019, increase in duty levels. In September, the Trump Administration had imposed the 10 percent duties on imports from a wide range of sectors and announced that the tariffs would increase to 25 percent on January 1. The latest Trump-Xi agreement does not reduce or eliminate the current 10 percent duty, and the White House press release states that the increase to 25 percent “will” take place absent an agreement within the 90-day period. Nor does the latest announcement affect the 25 percent duties on separate lists of Chinese imports covering $34 billion and $16 billion in Chinese imports, respectively.

All three sets of tariffs have been imposed pursuant to the U.S. Administration’s determination in March under Section 301 of the Trade Act of 1974 (“Section 301”) that China’s technology transfer and intellectual property (“IP”) policies are harming U.S. companies. Notably, according to the White House, the negotiations that will take place in the coming 90 days will be broader in scope than IP policies, covering “forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture.”  Chinese official statements to date have not referenced the 90-day deadline or the specific issues cited by the White House, instead emphasizing that the talks would be aimed at negotiating a removal of each side’s additional tariffs and suggesting that “reasonable U.S. concerns” could be gradually resolved as China undertakes a new round of economic reforms.

China agreed to purchase a “very substantial” amount of U.S. products across the agricultural, energy, and industrial sectors, with the agricultural purchases commencing “immediately.” In subsequent remarks, President Trump stated that China “will be getting rid of tariffs,” possibly referencing removal of some of China’s retaliatory tariffs to enable increased purchases of U.S. products. Additionally, in what the White House termed a “humanitarian gesture” in aid of the U.S. battle against opioid addiction, President Xi agreed to designate Fentanyl as a controlled substance, subjecting those exporting the drug to the U.S. to the “maximum penalty” under Chinese law.

The next 90 days could provide a welcome opportunity to address longstanding bilateral trade issues. However, resolution of the structural issues cited by the White House would be extremely challenging in such a short timeframe, which may introduce greater short-term uncertainty into the environment. As such, companies with interests in U.S.-China trade relations should take appropriate steps to try to shape outcomes of these negotiations and monitor developments affecting supply and market access. Meanwhile, affected companies should also consider submitting tariff exclusion requests for products on the $16 billion list, which are due by December 18, 2018.

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Photo of Christopher Adams Christopher Adams

Christopher Adams advises clients on matters involving China and the region. A non-lawyer, Chris served as the Senior Coordinator for China Affairs at the Treasury Department. He coordinated China policy issues across the U.S. government, led negotiations with China on a broad range…

Christopher Adams advises clients on matters involving China and the region. A non-lawyer, Chris served as the Senior Coordinator for China Affairs at the Treasury Department. He coordinated China policy issues across the U.S. government, led negotiations with China on a broad range of trade and investment issues, managed the highest level U.S.-China economic policy dialogues for the Obama and Trump administrations, and advised the Treasury Secretary and other cabinet officials.

Chris helped develop and implement U.S. trade policy toward China with the Office of the United States Trade Representative (USTR) from 2007 to 2015 as Deputy Assistant U.S. Trade Representative for China Affairs, Senior Policy Advisor to the Deputy USTR, and Minister Counselor for Trade Affairs at the U.S. Embassy in Beijing, USTR’s first representative in China.

Chris directed government affairs, public relations, and corporate marketing in China for the Eastman Kodak Company from 2001 to 2006 as Chief Representative for China; Vice President, North Asia Region; and Director, Olympic Programs. During this time, Chris was elected to four consecutive terms as a Governor of the American Chamber of Commerce in China and served on the Chamber’s Public Policy Development Committee.

Chris assisted companies with market access issues as a commercial officer in the U.S. Foreign Commercial Service in Beijing and Taipei, from 1993 to 2001. Before joining the Commerce Department, Chris managed media relations and information programs with the American Institute in Taiwan and directed business advisory services at a private trade association in Washington, DC.

Photo of John K. Veroneau John K. Veroneau

Ambassador John Veroneau is a Chambers-ranked international trade lawyer in the firm’s International Trade Practice Group. Having served in senior positions in both Executive and Legislative branches, he provides legal and strategic advice to clients on a broad range of international trade matters.

Ambassador John Veroneau is a Chambers-ranked international trade lawyer in the firm’s International Trade Practice Group. Having served in senior positions in both Executive and Legislative branches, he provides legal and strategic advice to clients on a broad range of international trade matters. Ambassador Veroneau held Senate-confirmed positions under President Bush as Deputy United States Trade Representative (USTR) and USTR General Counsel, and under President Clinton as an Assistant Secretary of Defense.

Photo of Timothy P. Stratford Timothy P. Stratford

Tim Stratford is senior counsel and a member of the firm’s International Trade, Corporate, and Public Policy Practice Groups. He is also serving as Chairman Emeritus of the American Chamber of Commerce in the People’s Republic of China. Tim’s practice is focused on…

Tim Stratford is senior counsel and a member of the firm’s International Trade, Corporate, and Public Policy Practice Groups. He is also serving as Chairman Emeritus of the American Chamber of Commerce in the People’s Republic of China. Tim’s practice is focused on advising international clients doing business in China and assisting Chinese companies seeking to expand their businesses globally. Except for the five years he spent in Washington, DC as Assistant U.S. Trade Representative (2005-2010), Tim lived and worked continuously in the greater China region from 1982-2023, including for twelve years as managing partner of the firm’s Beijing office.

As Assistant USTR, Tim was responsible for developing and implementing U.S. trade policy toward mainland China, Taiwan, Hong Kong, Macao and Mongolia. He worked closely with other senior U.S. and Chinese officials from numerous government departments and agencies to address problems encountered by companies engaged in bilateral trade and investment and co-chaired a number of important bilateral working groups and dialogues established under the U.S.-China Joint Commission on Commerce and Trade and the U.S.-China Strategic & Economic Dialogue.

Prior to serving at USTR, Tim was General Counsel for General Motors’ China operations, where he was a member of GM’s senior management team in China and oversaw the company’s legal and trade policy work. Tim also served previously as Minister-Counselor for Commercial Affairs at the U.S. Embassy in Beijing and as three times as Chairman of the American Chamber of Commerce in China. He is a graduate of Harvard Law School and Brigham Young University, and is fluent in Mandarin and Cantonese.