An extremely confusing trade backdrop was made even more of a conundrum Thursday, weighing on retailers as they prepare for the vital holiday season.
The day started on a positive note when a high-ranking Chinese official signaled that China and the U.S. had come to an agreement to roll back some of the tariffs that they had slapped on each other.
“If the phase-one deal is signed, China and the U.S. should remove the same proportion of tariffs simultaneously based on the content of the deal,” Gao Feng, a spokesman at the Chinese Commerce Ministry said at a press briefing. “This is what [the two sides] agreed on following careful and constructive negotiations over the past two weeks.”
That caused stocks to jolt, with retail investors hopeful that the U.S. would shelve its plans to impose more tariffs on Chinese-made goods in mid-December.
However, it wasn’t to last; by the afternoon the stock market optimism started to fade as U.S. officials remained tight-lipped on the matter, with no statements on the U.S. Trade Representative’s site and zero tweets on the subject from President Donald Trump, usually his favorite place to break trade news.
Conflicting media reports cited some U.S. government sources as saying a deal had been made, while others denied this.
As a result, the Dow Jones Industrial Average early gains were trimmed to just 0.6 percent, or 182.24 points, to 27,674.80. The S&P 500 was up 0.27 percent to 3,085.18, while the Nasdaq was just 0.28 percent higher to 8,434.52.
Last month, the U.S. shelved additional tariffs for handbags due to come into force after it struck a partial trade deal with China, but there was no relief for apparel and footwear.
After two days of negotiations in Washington, D.C., which saw Trump meet China’s top trade negotiator vice premier Liu He, it was confirmed that levies on $250 billion of Chinese-made goods, including handbags, would no longer rise from 25 to 30 percent.
There was no mention of lifting the 15 percent tariffs on large swaths of apparel and footwear that were imposed last month as the first part of a move to target another $300 billion of items, although Robert Lighthizer told reporters Trump had not yet decided whether to follow through with threats of a second tranche in mid-December, which would impact all clothes and shoes.
At the time, the American Apparel & Footwear Association warned that despite the small reprieve, Americans are still being burdened with an additional 25 percent on backpacks, handbags, luggage, hats and gloves. It also means that 92 percent of clothing, 53 percent of our shoes, and 68 percent of home textiles imported from China continue to be charged an additional 15 percent tariff.
“These rates are on top of the hefty tariffs already being charged on these products,” Rick Helfenbein, president and chief executive officer of the AAFA, said. “The continued costs and uncertainties associated with this tariff policy mean the Grinch still has stolen our Christmas.”