Trade Alert: U.S.,China Reach “Phase One” Trade Deal

5 percent tariff increase set for October 15 postponed

October 16, 2019

On Friday, President Trump announced that the United States and China had reached a “phase one” trade deal to address outstanding issues in the United States-China trade war.
“The announcement of the first phase of a trade deal between the U.S. and China brings the outdoor industry a Halloween season treat and is a positive and necessary step forward, particularly if it delays tariff increases set to go into effect this month and new tariffs set to start in December on outdoor products,” said Patricia Rojas-Ungar, vice president of government affairs for Outdoor Industry Association. “We urge the administration to let this agreement serve as the beginning of the end of the trade war that for months has been wreaking havoc on American outdoor industry businesses, jobs and consumers. Now is the time to conclude a comprehensive deal with China that immediately lifts all punitive tariffs.”
As we have done over the last year, OIA will help our members and stakeholders understand the details of this trade development.
The facts on the deal
While the full details have yet to be released, the agreement will include the postponement of a 5 percent tariff increase – from 25 to 30 percent – on $250 billion worth of goods sourced from China that was previously scheduled to take effect on October 15. The trade agreement will be written over the next three weeks with a signing ceremony with President Trump and President Xi of China expected to take place on November 17 at the Asia-Pacific Economic Cooperation summit.
Why it’s important to outdoor industry businesses
The outdoor industry has already paid nearly $2 billion dollars in punitive tariffs since Sept. 2018. Any reprieve in these punitive taxes is welcome news to businesses who are having to absorb these fees on a regular basis and who do not want to see their product prices increase. Phase one of the deal will result in the punitive tariff on products such as backpacks, sports bags, camp chairs, camp stoves, leather ski gloves, bikes and bicycle parts and hats (List 3) will remain at 25 percent versus jumping to 30 percent this month. Unfortunately, the agreement does not remove the 25 percent tariff on those products nor does it address the 15 percent tariff on outdoor apparel, footwear, equipment and sporting goods that went into effect on September 1 (List 4a) or the 15 percent tariff set to go into effect on a second group of those goods on December 15 (List 4b). Those tariffs will likely be the subject of upcoming negotiations.
What’s next
OIA will continue to monitor developments in the U.S.-China trade war and push for a comprehensive agreement that will lift all punitive tariffs immediately. In addition, we will identify opportunities for outdoor companies to engage Congress and the media to highlight the impact of tariffs on jobs and essential outdoor products.