Tariffs on Chinese Imports Have Not Impacted US Economy

Trump pulling U.S. out of international pact on postal rates

The administration says the U.S. Postal Service is losing money under the current worldwide agreement and that American businesses are being undercut by Chinese companies because they can ship goods to the United States on the cheap.

The treaty sets rates that national postal services charge to deliver mail and small packages from other countries. According to the Swiss body's constitution, the USA can leave the treaty after one year - during which time the State Department says it hopes to negotiate for more satisfactory terms.

China's Ambassador to the U.S. Cui Tiankai told "Fox News Sunday" host Chris Wallace that there is no trade war between the two countries, but then seemed to contradict himself by claiming America started it.

"This outdated arrangement contributes significantly to the flood of counterfeit goods and risky drugs that enter the country from China", Jay Timmons, the president of the National Association of Manufacturers, said in a statement. The move would escalate a trade dispute with China.

The action by the White House has been attributed by many sources as a response to UPU rates favoring other countries, with China singled out most frequently.

He Weiwen, a senior fellow at the Centre for China and Globalisation in Beijing a former economic adviser at the Chinese consulates in NY and San Francisco, said China and the United States needed to "create conditions" for a leaders' meeting to take place during the G20 summit in Argentina. Trump previously has announced tariffs against Chinese goods estimated to be worth $250 billion. The Bush administration reportedly shifted the focus of United States missile defense plans from Europe to the Pacific and called for long-range weapons targeting China's growing military power.

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The UPU said it regrets the move and that it plans to meet with USA officials about the issue. The withdrawal process would take a year.

The official described it as an economic distortion that the administration wanted to correct.

If it happens, it would benefit US merchants and shippers, including Amazon.com, who say they are undercut by foreign postal services' access to low rates. The treaty was last modified in 2016 to raise some shipping costs on Chinese exports. Online shoppers in the United States have often benefited from the arrangement, gaining access to foreign goods at little cost.

"President Donald J. Trump received a report from the Department of State pursuant to the August 23, 2018, Presidential Memorandum on "Modernizing the Monetary Reimbursement Model for the Delivery of Goods Through the International Postal System and Enhancing the Security and Safety of International Mail".

Andrew Collier, managing director at Orient Capital Research in Hong Kong, said that there's likely to be "leakage" in China's debt economy - meaning that those who need credit will find a way to get it through the shadow banking system.

He believes that Trump "will keep raising the stakes until Chinese President Xi Jinping makes a phone call to Trump and asks him how to resolve it so they can both sign a win-win trade deal".

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