The U.S. will allow companies to defer paying tariffs on many imported goods for 90 days, a move aimed at freeing up cash for pandemic-hit employers while leaving punitive measures against China and other nations intact.
“This will protect American jobs and help these businesses get through this time,” Treasury Secretary Steven Mnuchin said in a statement.
The deferral doesn’t apply to anti-dumping or countervailing duties, or so-called Section 201, 232 or 301 tariffs. So it won’t ease President Donald Trump’s punitive import taxes on Chinese goods, on steel and aluminum, or those tied to enforcement actions he took including against Airbus SE.
To qualify for the deferment, U.S. importers have to demonstrate “significant financial hardship,” according to a separate statement from U.S. Customs and Border Protection.
For several weeks, White House officials have debated tariff relief to help companies that are laying off millions of workers and clamoring for emergency federal loans to cushion the a sharp, steep economic downturn that may rival the Great Depression.
While the tariff-payment deferral might ease some short-term strain, the bigger issue now is whether it will help counter a slump in domestic consumption.
“The postponement has little effect in stabilizing the U.S. economy,” Gai Xinzhe, a senior analyst at Sino-Ocean Capital in Beijing. “The problem is with the demand side, and this postponement can hardly solve that.”
The move comes amid heightened rhetoric between the world’s two largest economies as the Trump administration blames the global spread of Covid-19 on China’s perceived lack of transparency about the initial outbreak in the city of Wuhan. Deaths in the U.S. attributed to the disease have topped 41,000.
“If it was a mistake, a mistake is a mistake,” Trump said during news conference over the weekend. “But if they were knowingly responsible, yeah, then there should be consequences.”
A top Wuhan laboratory official denied any role in spreading the new virus.
In January, the countries signed phase one of a trade deal in which China agreed to buy more American imports, including energy and agriculture commodities, in exchange for a cease fire on tariff increases. According to Bloomberg Economics, China wasn’t hitting purchase targets at the three-month mark.
As China’s economy slowly reopens, that may be about to change. A tanker carrying liquefied natural gas, which departed from the U.S. around March 21, docked at a Chinese port on Sunday, according to vessel-tracking data compiled by Bloomberg on Monday. That’s China’s first import of U.S. LNG in a year, and six more ships are en route.