China to halve tariffs on $75-bn American goods

China will halve tariffs on some $75 billion of imports from the US later this month, reciprocating a US action and likely satisfying part of the interim trade deal.

The cut will be effective from 1.01 pm. on February 14 in Beijing, according to a Ministry of Finance statement on Thursday, the same time as when the US will implement reductions in tariffs on Chinese products. Punitive Chinese duties on American goods that were adopted from September 1 last year will be lowered, with the rate on some dropping to 5 per cent from 10 per cent, and the others to 2.5 per cent from 5 per cent.

Both nations agreed to cut tariffs on each others’ goods as part of the phase-one deal signed last month. Even with the world’s two biggest economies pausing their trade war, duties remain on large parts of their bilateral trade.

The ongoing coronavirus that has claimed more than 500 lives in China and sickened thousands is raising concerns that the Asian nation might have to cancel orders if the situation worsens.

China National Offshore Oil told some suppliers it won’t take delivery of liquefied natural gas cargoes it has agreed to, invoking what’s called force majeure to get out of the contracts. The January 15 deal has a clause that states the US and China will consult “in the event that a natural disaster or other unforeseeable event” delays either from complying. Chinese officials are hoping the US will agree to some flexibility on pledges in their phaseone trade deal, people familiar with the situation said, though it is unclear if such a request has been formally raised.

The US is monitoring developments on the virus carefully and will have “a much better idea over the next two weeks,” Treasury Secretary Steven Mnuchin said Thursday on Fox Business Network. “Based on current information, I don’t expect there will be any issues in them fulfilling their commitments.”

Other retaliatory tariffs China has imposed on US goods will remain, according to the statement. In the meantime, the Asian nation will continue processing applications for tariff exemptions, it said.

“We don’t see any impact from this tariff cut — the measures are in line with what the US side is doing,” said Li Qiang, head of Shanghai JC Intelligence While China will continue to process waivers on farm product imports, it won’t remove its punitive tariffs if the US maintains its duties, he said.

The yuan extended gains after news of the tariff reduction, with the offshore rate advancing as much as 0.3 per cent to 6.9573 per dollar.

US tariff reduction in China phase one to Take effect from February 14