Ongoing efforts to resolve the nearly 18-month-old U.S.-China trade dispute have long been marked by halting progress and seemingly fruitless talks—not to mention President Trump’s tendency to tackle trade policy in tweets—but the latest news leaves even more room for consternation.
That’s because both sides appear to be backpedaling on promises made, casting doubt on the validity of the so-called “phase one” agreement the U.S. and China reached in recent weeks. Of course, the big issue for the U.S. has always been the protection of American intellectual property assets. And each time the countries get close to some agreement, China appears to resist efforts to curtail technology transfers.
President Trump, for his part, isn’t about to accede to China’s demands to lift stifling tariffs on its imports. He has little incentive to do so when he insists that keeping these imports duties in place help to reduce the two countries’ trade imbalance.
In reality, lower imports and lower exports don’t exactly restore parity to the trade deficit.
The ongoing trade impasse has stymied companies’s ability to plan their business operations for the next quarter and beyond.
Walter Loeb, former retail analyst and now a consultant, said the uncertainty over tariffs has a lot of companies worrying about 2020. He’s also concerned about what the impact will be for companies that are struggling and trying to right their ships.
J.C. Penney, for example, said Friday it had narrowed its third-quarter loss, thereby posting better-than-expected results than what Wall Street had forecasted. While that’s a bit of short-term good news, on the longer-term horizon, Penney’s turnaround will made much more difficult if tariffs continue in place, Loeb said, because the mass merchant imports much of its goods from China.
Despite continued expectations of a strong holiday selling season, there’s been reports of consumers expecting deeper discounts. And U.S. retail sales on Friday showed that consumers in October were already pulling back on some of their spending, including fewer purchases of big-ticket items.
As each week seems to bring another plot twist–not to mention new roadblocks–on trade talks, Loeb said he’s hoping the week ahead will bring positive news on the tariff front. That would be welcomed by companies striving to plot their course for 2020, and maybe even spur some extra holiday cheer now that Thanksgiving is just around the corner.
Source: Sourcing Journal