Less than 24 hours after China announced the sanctions, the U.S. Department of Commerce took the initiative to extend the tariff exemption for Chinese goods.
On December 26, Chinese Foreign Ministry spokesperson Mao Ning announced that due to the US announcement of illegal sanctions against Chinese officials and companies over Xinjiang-related issues, China will take countermeasures against one institution and two individuals including Caron, a U.S. intelligence and data company, that has been collecting sensitive Xinjiang-related information for a long time and providing a "basis" for U.S. illegal Xinjiang-related sanctions, including freezing assets in China and banning entry into China.
However, what is surprising is that less than 24 hours after China announced the sanctions, the United States took the initiative to show goodwill and began to ease the trade relationship between China and the United States.
On December 26, local time in the United States, the Office of the United States Trade Representative issued an announcement announcing the extension of the tariff exemption period for 352 Chinese imports, as well as Chinese goods related to the new crown epidemic prevention, to May 31, 2024.
It is worth mentioning that the Office of the United States Trade Representative also issued a statement saying that it will solicit public comments for one month starting January 22, 2024, to see what the American public thinks about this measure, and then consider how to deal with the tariffs after the expiration next year based on the results of the review.
Of course, this statement of solicitation of opinions by the United States looks more like finding a step for itself, and in fact, the US government has long had the intention of canceling the tariffs on relevant products. Because of the fact that the United States has imposed tariffs on China, American companies and people are basically not very satisfied, because most of the goods in the United States need to rely on overseas imports, especially Chinese goods are of high quality and low price, and there is a great demand in the United States.
In recent years, U.S. inflation has continued to worsen, and tariffs will only lead to higher costs for U.S. importers, manufacturers and final consumers.
Judging from the results, the announcement of the extension of tariff exemptions for Chinese goods by the United States is a positive thing, but the reason behind this is not so simple.
First, the U.S. announced the extension of the tariff exclusions after China showed its sincerity.
As early as December 22, the Ministry of Finance just issued an announcement on the period of exemption from tariffs on some U.S. products, and the relevant policies will be extended to July 31, 2024, and we also specifically mentioned in the announcement that the relevant measures themselves are tariffs imposed by China to counter the U.S. Section 301 measures.
Obviously, this is an agreement between China and the United States after discussions.
In August this year, during the visit of U.S. Secretary of Commerce Raimondo to China, a consensus was reached with the Chinese side, and the two sides announced the establishment of a new communication channel between the Chinese and American ministries of commerce, that is, the establishment of a special working group to seek solutions to specific business problems, which focused on the issues discussed by the United States on China Section 301 tariffs, semiconductor policy, two-way investment restrictions, discriminatory subsidies, sanctions on Chinese companies and so on.
Now that China and the United States have announced the extension of tariff exemptions, it is clear that such a consultation mechanism has worked, but the Chinese side announced it earlier than the United States.
And we also note that there is a difference in the extension time of the Sino-US exemption, the expiration time of the tariff policy of both sides is December 21, but China has extended it to July 31, 2024, and the United States has only extended it to May 31.
Second, the extension of the tariff-exempt goods by the United States is also based on the interests of the United States.
In fact, before the establishment of a new consultation mechanism between China and the United States, the United States had taken the initiative to extend the period of tariff exemption for related goods many times, and the reason for this can be known from the category of goods.
These commodities mainly include industrial parts, auto parts, chemical products, bicycles and vacuum cleaners, as well as medical products related to the new crown epidemic prevention, all of which have a common feature, that is, the industrial technology content is not high, and it is at the bottom of the supply chain.
In other words, the U.S. still uses China as a manufacturing plant for cheap goods, and it is only because the U.S. market has a high demand for these parts and daily necessities that tariffs have been relaxed.
As for China's high-end manufacturing exports, there are still many restrictions, and most of China's related companies are also lying on the US sanctions list.
As Yellen said, the United States needs these commodities, and this is also to alleviate high inflation in the United States, which is still a "drop in the bucket" to improve the substantive relationship between China and the United States.
As recently as December 27, U.S. Ambassador to China Burns retweeted a statement by U.S. Secretary of State Antony Blinken on social media, in which he said, "The United States will continue to engage with China from a position of strength." ”
Blinken believes that the U.S. partnership in the Indo-Pacific region has been strengthened like never before, while the U.S., along with the G7, the European Union, and other allies, are working together to confront the "China challenge."
Of course, it can also be seen from here that the mentality of the United States has changed somewhat, in the Trump era, the U.S. government believes that relying on the United States' own strength, it can defeat China in the trade war, and now the Biden administration's strategy is to unite more allies and join hands to contain China.