An announcement by US President Donald J. Trump said his administration was considering leaving tariffs on Chinese products at current levels caused worldwide stocks to nosedive at a time when it remains an open question as to whether the current trade standoff between the US and China will end soon.
On 1 March, Washington was due to scale-up its tariffs on Chinese products by introducing a 25% band on $200 billion worth of goods. This was delayed pending negotiations with China, but while the so-called “trade war” is not escalating, tariffs will not be removed any time soon.
“We’re not talking about removing them, we’re talking about leaving them for a substantial period of time because we have to make sure that if we do the deal with China that China lives by the deal,” President Trump said on Wednesday.
Trump has said on multiple occasion that an agreement is “very very close”. The Chinese side wants the removal of tariffs to be part of the negotiating agenda, but Washington has always argued that this policy was always intended to bring China on the negotiating agenda.
Trump has often argued that US tariffs are bolstering US revenue with “billions and billions.” However, this policy does not have an effect on the trade deficit itself. Recent figures suggest that the US trade deficit – currently standing at $621 billion – is the highest since 2008.