(Photo by Joe Raedle/Getty Images)
President Trump has struck a trade deal with China to cancel a planned 15 percent tariff on smartphones, laptops and video game consoles imported from the country.
The tariffs on the Chinese-made electronics were set to go into effect this Sunday on Dec. 15. But on Friday, Trump tweeted his administration had agreed to a "very large Phase One Deal" with China.
"The Penalty Tariffs set for December 15th will not be charged because of the fact that we made the deal," he added in a follow-up tweet.
The tech industry is no doubt breathing a sigh of relief. Companies including Apple, Microsoft, and Sony have been warning the Trump administration that imposing the tariffs would risk forcing them to raise prices on their electronics. "US laptop manufacturers currently rely on Chinese suppliers to satisfy US demand for laptop products. Transitioning to alternative supply sources is not feasible in the near term," Dell, HP, Intel, and Microsoft said in a June letter to the US Trade Representative.
Despite the new deal, Trump refrained from lifting the existing tariffs his administration has placed on Chinese imports over the last year. "The United States will be maintaining 25 percent tariffs on approximately $250 billion of Chinese imports, along with 7.5 percent tariffs on approximately $120 billion of Chinese imports," the Office of the US Trade Representative said on Friday.
Previously, the US had been tariffing certain Chinese-manufactured PC parts, including graphics cards, motherboards, and desktop cases at 25 percent. But in September, the Trump administration granted the components one-year exemptions.
Meanwhile, tariffs on other imported Chinese electronics such as PC desktops, TVs, and Bluetooth speakers remain in effect. To avoid paying the duties, tech vendors have been moving device manufacturing out of China to other regions such as Taiwan, Southeast Asia, and Mexico, so consumers may not have encountered price increases.
To reach phase one of the trade deal, China has agreed to make "substantial" purchases of more US goods and services in the coming years, the US Trade Rep's Office said. China has also committed to making structural reforms to its "economic and trade regime" in the areas of intellectual property and technology transfer. Trump says both countries will immediately work on hammering out details for phase two.