Dear PMA Members,
As you may know, recent activity on several trade fronts could have an impact on the global fresh produce and floral industries. We wanted to provide you with the most recent information on tariff negotiations between the U.S. and China, as well as the next steps with the U.S. Mexico Canada Agreement (NAFTA 2.0).
Status of U.S.- China Tariff Negotiations
U.S. President Donald Trump and Chinese President Xi Jinping recently met to discuss, among other things, the escalating tariff situation. As a result of those discussions, the U.S. has agreed to temporarily delay the escalation of certain additional tariffs on imports of thousands of products from China from 10 percent to 25 percent that was scheduled to take place January 1, 2019. In return, China will be opening its market to U.S. agricultural and industrial products.
Although the U.S. has delayed the additional tariff escalation, importers will continue to pay an additional duty of 10 percent on various inputs from China until further notice.
The temporary delay in additional tariff escalation depends on the outcome of U.S.-China trade negotiations over the course of a 90-day period beginning December 1, 2018. The White House reports that if no agreement is reached once that period has passed, the additional tariffs will escalate to 25 percent as planned.
Peter Navarro, Director of the White House National Trade Council, stated after the meeting between President Trump and President Xi that Chinese officials presented a list of 142 demands
made by the United States during the escalation of the dispute and their plans to address each. Some will require changes to Chinese law, others will require enforcement of current laws.
Details have not been released on China’s plans for purchasing U.S. agricultural products.
PMA previously reported that negotiators from the U.S., Mexico, and Canada reached an agreement updating the North American Free Trade Agreement (NAFTA). On Friday, November 30, President Trump, President Enrique Peña Nieto of Mexico, and Prime Minister Justin Trudeau of Canada signed the United States-Mexico-Canada Agreement (USMCA).
After signing, President Trump notified that he will be formally terminating NAFTA within a relatively short period of time. He says that the U.S. Congress will have the choice of the USMCA or pre-NAFTA. The underlying text of NAFTA requires six months’ notice to the other parties of intent to terminate.
USMCA has a long road to ratification in the United States. In 2019, the U.S. House of Representatives transitions to Democratic control. Speaker Designate Nancy Pelosi released a statement
on USMCA, saying the Agreement will be judged by whether it improves wages, working conditions and well-being of American workers and farmers. She noted that Democrats are waiting to see enforcement provisions on workers and the environment and that Mexico must pass laws to raise wages and better working conditions.
Meanwhile, many in the agricultural sector are waiting for a resolution to the U.S. tariffs on steel and aluminum that have resulted in retaliatory tariffs from Mexico and Canada on many U.S. agricultural products shipped to those destinations.
PMA will continue to keep you updated as we learn more about the U.S.-China negotiations and its impact on trade in agricultural products. We will also report on the path to USMCA ratification.
As always, please reach out with any questions or feedback.