China to halve tariffs on some U.S. imports as coronavirus risks grow
BEIJING China on Thursday said it would halve additional tariffs levied against 1,717 U.S. goods last year, following the signing of a Phase 1 deal that defused a bruising trade war between the world’s two largest economies.
While the announcement reciprocates the U.S. commitment under the deal, it is also seen by analysts as a move by Beijing to boost confidence amid a virus outbreak that has disrupted businesses and hit investor sentiment.
Casting doubts over the immediate outlook, however, was the prospect raised in a local media report that Beijing could invoke a disaster-related clause in the trade agreement, which might allow it to avoid repercussions even if it cannot fully meet the targeted purchases of U.S. goods and services for 2020.
Washington welcomed the tariff cuts as a “big step in the right direction,” but said it expected China to live up to its obligations under the Phase 1 trade deal despite the outbreak. “We’re monitoring the virus carefully,” U.S. Treasury Secretary Steven Mnuchin told Fox Business Network. “But based on current information, I don’t expect there will be any issues in them fulfilling their commitments.”
China’s finance ministry said in a statement that starting Feb. 14, additional tariffs levied on some goods will be cut to 5 per cent from 10 per cent and others lowered to 2.5 per cent from 5 per cent.
The ministry did not state the value of the goods affected by the decision, but the products affected by the new rule are among US$75 billion of goods hit by Chinese tariffs of five per cent to 10 per cent tariffs that came into effect on Sept. 1. In a separate statement, the finance ministry said the tariff reduction corresponds with those announced by the United States on Chinese goods that are also scheduled for Feb. 14.
Further adjustments would depend on the development of the bilateral economic and trade situation, the ministry said.
The reductions will cut tariffs on soybeans from 30 per cent to 27.5 per cent, although some traders say the impact could be limited as the 25 per cent tariffs remains in place. Duties on crude oil will fall to 2.5 per cent from 5 per cent that was imposed in September.
The remaining tariffs were scheduled to kick in Dec. 15 but were suspended due to the interim trade deal. “Any move to de-escalate is always good,” said Tommy Xie, head of Greater China research at OCBC Bank in Singapore. Reuters