Proposed tariff cuts welcomed by US firms

Business and industry representatives in the United States have welcomed the tariff reduction proposal on a total of $60 billion worth of goods put forward by the US-China Board of Trade in September, as the levies have caused uncertainty ahead of the holiday season.

The proposal to lower tariffs on both US and Chinese exports was announced by the Board of Trade on Sept 27, following President ­Xi Jinping's meeting with President Donald Trump in Washington, DC.

China's Ministry of Commerce said the US will reduce tariffs on imports from China including toys, home appliances, baby products, kitchen and bathroom fixtures and holiday gifts, while China will lower tariffs on imports from the US including agricultural products, personal care products, medical devices and coal.

In a statement, Greg Ahearn, president and CEO of The Toy Association, said: "The toy industry is pleased that toys have been designated as a category of nonsensitive goods under the US-China Board of Trade framework. This marks a historic win for American toy companies — 96 percent of which are small businesses and families — especially as we approach the holidays."

Gary C. Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics, said that if the tariff reductions proposed by the Board of Trade materialize, they could lead to "significant gains" for both sides.

However, US Trade Representative Jamieson Greer recently stated that no timeline has been decided to cut tariffs on goods recommended by the Board of Trade.

"We have to stick to our legal processes," he told the G20 trade ministers' meeting that took place from Sept 30 to Oct 1 in Milwaukee, Wisconsin.

He added that other USTR Section 301 investigations into Chinese products would continue.

In another significant move, the US and China extended an agreement to pause imposition of higher tariffs by two months — it was set to expire on Nov 10.

While the pause provides temporary clarity for US businesses, many still want a long-term solution to steady the US-China trade relationship further, said an expert.

Professor Wei Liang, the Gordon Paul Smith Chair of international policy at the Middlebury Institute of International Studies at Monterey in California, said that uncertainty over the length of future tariff pauses hits not only US companies that invest in China, but also other companies that want to continue to manufacture in China and then export back to the US market.

"They cannot just rely on this (pause of) six months, 10 months, 12 months, tariffs. They really need a clear message before they know what to do next. That market uncertainty has hurt a lot of business interests," she said.

Meanwhile, according to a survey by China Beige Book, a research firm based in New York, US businesses have placed more orders for Chinese goods this year than a year ago.

Its survey, seen by CNBC, found that as "China's relative tariff position improved", shipments to the US rose on both a yearly and monthly basis, according to the data taken from a poll of 1,295 Chinese companies from Sept 1 to 22.