What’s New With Tariffs: 2 Updates

Things have been busy in Washington lately, in a surprise to no one. The good news, though, is that some of what’s happened could potentially lead to lower materials prices for the construction industry—or at least the mitigation of price fluctuation.

Here’s two updates you need to know:

1. Trade War with China 

After more than a year of tensions between the United States and China, President Trump officially signed Phase 1 of a trade deal with China last week. While the deal is only a partial agreement (Phase 2 to come), it’s a compromise that many in the industry have been holding their breath for. The U.S. has agreed to relax tariffs on $120 billion of Chinese imports—reducing tariff rates from 15% to 7.5%.

In turn, China has agreed to purchase an additional $200 billion in U.S. goods over the next 2 years. That number will increase incrementally over the next few years, according to the deal. As part of the agreement, the U.S. will reevaluate the current deal after 10 months. Officials say tariffs will likely remain at their current rates under Phase 1 until after the U.S. presidential election in November 2020, though.  

2. Passage of the USMCA

After a delay in impeachment proceedings, the Senate moved swiftly to pass the United States-Mexico-Canada Agreement (USMCA) last week. The deal passed the final step in Congress with a vote of 89-10. The agreement now goes to Trump’s desk, who is expected to sign it this week. The new agreement is an updated version of the North American Free Trade Agreement (NAFTA), passed in 1993.

The revised USMCA provides updated standards and expectations surrounding labor, intellectual property, anti-corruption security, and more. According to a report from the U.S. International Trade Commission, the agreement would increase gross domestic product by 0.35% over 6 years and create 175,700 new jobs.