Photo: Reuters/Jonathan Ernst

Remember when Trump was going to impose tariffs on steel and aluminum imported from anywhere? It didn’t take long for that to change. After his top trade officials said the Sunday before the announcement several weeks ago that there would be no exemptions, Trump gave Canada and Mexico a pass at the signing ceremony. On Wednesday, he added a few more places to that list for good measure. Argentina, Australia, Brazil, the member countries of the European Union, and South Korea have now joined Canada and Mexico on the temporary exemption list.

Yesterday, the world gasped when the US president raised his pen to sign a piece of paper that was apparently going to start an all-out trade war with China. Was it an order imposing tariffs on US$60 billion of imported Chinese products, annually, as headlines would lead you to believe? Nope. Not that. It was a memorandum instructing his trade representative to consider tariffs.

From the memorandum:

(b)  To advance the purposes of subsection (a) of this section, the Trade Representative shall publish a proposed list of products and any intended tariff increases within 15 days of the date of this memorandum.  After a period of notice and comment in accordance with section 304(b) of the Act (19 U.S.C. 2414(b)), and after consultation with appropriate agencies and committees, the Trade Representative shall, as appropriate and consistent with law, publish a final list of products and tariff increases, if any, and implement any such tariffs.

While Trump suggested during the announcement that we could expect tariffs in the ballpark of US$60 billion, he also indicated that the US was still in talks with China. The only thing we know for sure about the proposed tariffs based on the Section 301 investigation into alleged Chinese abuses, the basis for Thursday’s announcement, is that they haven’t been imposed yet.

We now know that the metals tariffs are explicitly a bargaining position for selected countries, as indicated by the administration’s decision to suspend them, pending negotiations. There is no indication that the tariffs on China are anything other than that.

We have 14 more days to find out how the negotiations will shake out.

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