Markets are having a bit of a party this morning after the Trump administration announced that it would delay its latest round of tariffs on some Chinese goods, including popular holiday purchases, such as cellphones, laptops, TVs, game consoles, toys, and clothing. At the moment I’m typing this, the Dow is up more than 400 points.
Trump took much of the world by surprise earlier this month when, after a fruitless round of trade negotiations with Beijing, he tweeted that the U.S. would place a 10 percent tariff on $300 billion of Chinese imports starting in September (another $250 billion is already covered by a 25 percent levy). Today, the Office of the U.S. Trade Representative said that it would push back the tariffs on many items until Dec. 15.
Trying to discern a rationale behind the White House’s trade moves is always a bit of a guessing game, especially now given that the president has reportedly stopped listening to many of his trade advisers and started making decisions based on his gut. Bloomberg notes that U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steve Mnuchin had a phone call with Chinese leaders Tuesday and have another chat planned in two weeks—so maybe the delay is a sign of progress in talks, a slight de-escalation after the rising tensions over recent weeks, which saw China cut off purchases from American farmers and the U.S. officially label China’s government a currency manipulator.
Or maybe it’s a tacit admission by the Trump team that slamming more tariffs on imports at a moment when both the global economy and the domestic economy look supremely fragile is a terrible idea that could come back to haunt them politically. Many of the items that won’t be subject to levies until December are run-of-the-mill industrial and consumer goods, such as chemicals, frozen fish, and diapers. But by pushing back the tariff date on the sorts of electronics that Americans like to buy around Christmas, the administration is giving the impression that it’s trying to avoid jacking up prices during the all-important holiday shopping season (even though the levies will technically be in place before Christmas, retailers will have plenty of opportunity to stock up on inventory before then). Voters don’t want to pay a Trump tax on their new iPhone or flat-screen, after all.
Update, Aug. 13, 2019, at 2:31 p.m.: Trump told reporters Tuesday afternoon that he did in fact delay the tariffs for the benefit of holiday shoppers. “We’re doing this for the Christmas season,” he said. “Just in case some of the tariffs would have an impact on U.S. customers.” Lest anybody take this as a tacit admission that maybe tariffs are bad for American consumers generally, though, Trump elaborated a bit. “So far they’ve had virtually none,” he added. “But just in case they might have an impact on people, what we’ve done is we’ve delayed it, so that they won’t be relevant to the Christmas shopping season.”