Roll­back of tar­iffs said to be deal term

U.S. agrees, says Chi­nese of­fi­cial


WASH­ING­TON — The United States and China have agreed that an ini­tial trade deal between the two coun­tries would roll back a por­tion of the tar­iffs placed on each other’s prod­ucts, a sig­nif­i­cant step to­ward de­fus­ing ten­sions between the world’s two largest economies.

The so-called phase one agree­ment has not been fi­nal­ized, and a deal could fail to ma­te­ri­al­ize as it has in pre­vi­ous rounds of ne­go­ti­a­tions. But if a pact is reached, the Trump ad­min­is­tra­tion has com­mit­ted to rolling back some tar­iffs, ac­cord­ing to peo­ple fa­mil­iar with the ne­go­ti­a­tions.

The com­mit­ment marks the first time the United States has agreed to re­move any of the tar­iffs it has placed on $360 bil­lion worth of Chi­nese goods. While Pres­i­dent Don­ald Trump can­celed a planned tar­iff in­crease in Oc­to­ber, he has rou­tinely dan­gled the prospect of ad­di­tional tar­iffs if Bei­jing does not change its eco­nomic prac­tices and ac­cede to Amer­ica’s trade terms.

The de­vel­op­ment sug­gests the two sides are mov­ing closer to a deal that would pro­vide re­lief to busi­nesses and con­sumers that have strug­gled with

the ad­di­tional costs of tar­iffs. Trump and his Chi­nese coun­ter­part, Xi Jin­ping, are fac­ing in­creas­ing po­lit­i­cal and eco­nomic pres­sure to re­solve their 19-month trade fight, which has in­flicted pain on both sides of the Pa­cific.

Gao Feng, a spokesman for China’s Com­merce Min­istry, said at his weekly news con­fer­ence in Bei­jing that China was in­sist­ing that any deal in­clude tar­iff re­duc­tions and that the United States had agreed to re­move tar­iffs as part of an agree­ment.

“In the past two weeks, the lead­ers of the two sides have con­ducted a se­ri­ous and con­struc­tive dis­cus­sion on prop­erly addressing the con­cerns of both sides, and agreed to can­cel the tar­iffs by stages in ac­cor­dance with the de­vel­op­ment of the agree­ment,” he said.

Gao did not spec­ify what tar­iffs might be dropped, or when.

White House eco­nomic ad­viser Larry Kud­low con­firmed the ad­vance in ne­go­ti­a­tions. “If there’s a phase one trade deal, there are go­ing to be tar­iff agree­ments and con­ces­sions,” he said. The ne­go­ti­a­tions are on­go­ing and a time or place for the sign­ing of any pact is yet to be de­ter­mined.

Gao’s state­ment that China would in­sist on can­cel­ing some tar­iffs was a sub­tle shift from his pre­vi­ous com­ments, which were some­what less spe­cific on what China re­quired for an in­terim agree­ment.

“If China and the United States reach the first phase agree­ment, ac­cord­ing to the con­tent of the agree­ment both sides should can­cel added tar­iffs at the same time with the same pro­por­tion,” he said. “This is an im­por­tant con­di­tion for reach­ing an agree­ment.”

Nearly four weeks af­ter Trump said the two sides had reached an “agree­ment in prin­ci­ple,” the White House and China con­tinue to hag­gle over terms. These in­clude the ex­tent to which the U.S. will roll back tar­iffs on Chi­nese im­ports as well as spe­cific Chi­nese pledges to pro­tect the in­tel­lec­tual prop­erty and trade se­crets of U.S. com­pa­nies.

Some other pro­vi­sions are largely com­plete, in­clud­ing ones that gov­ern cur­rency moves and the open­ing of China’s fi­nan­cial ser­vices mar­ket to for­eign com­pa­nies.

“Our un­der­stand­ing is the two sides are very close to an agree­ment,” said My­ron Bril­liant, ex­ec­u­tive vice pres­i­dent for the U.S. Cham­ber of Com­merce. “The tim­ing is still to be de­ter­mined.”

In­vestors have al­ready be­gun an­tic­i­pat­ing some type of res­o­lu­tion. Stocks soared Thurs­day af­ter Gao’s com­ments, but the stock rally faded in the af­ter­noon.

Last month, Trump an­nounced that he would drop his plan to in­crease tar­iffs to 30% on Oct. 15 as part of a first-phase trade deal, but made no men­tion of the tar­iffs he had al­ready placed on more than $360 bil­lion of Chi­nese prod­ucts.

Since then, the United States has be­gun con­sid­er­ing rolling back tar­iffs put in place Sept. 1 on more than $100 bil­lion of Chi­nese food, cloth­ing, lawn mow­ers and other prod­ucts, ac­cord­ing to peo­ple briefed on the dis­cus­sions.


Mar­kets, which Trump pays close at­ten­tion to, are in­creas­ingly op­ti­mistic about the chances for a deal and have been ris­ing steadily.

“We can be cau­tiously op­ti­mistic here,” said Mary Lovely, a trade econ­o­mist at the Peter­son In­sti­tute for In­ter­na­tional Economics in Wash­ing­ton. “The sig­nals that are com­ing out are mov­ing in the right di­rec­tion for a deal.”

While mar­kets are boom­ing, farm and man­u­fac­tur­ing states con­tinue to strug­gle un­der the weight of Trump’s trade war, which has in­cluded re­tal­ia­tory tar­iffs on U.S. goods.

The fight has brought the economies of sev­eral farm belt states to a near stand­still, data re­leased by the Com­merce Depart­ment on Thurs­day showed. From the mid­dle of 2018 through the mid­dle of this year, growth in Iowa, Kansas and Ne­braska slowed to less than 1% for the year, well below the more rapid ex­pan­sions they had en­joyed in the first half of 2018.

In the sec­ond quar­ter of this year, which ran from April to June, gross do­mes­tic prod­uct rose by an an­nual rate of just 1.1% in Wis­con­sin, Michi­gan, Iowa, Illi­nois and Ge­or­gia. Gross do­mes­tic prod­uct grew by just 1% in In­di­ana and Ken­tucky.

While the Trump ad­min­is­tra­tion has in­sisted that Amer­i­cans are not bear­ing the brunt of the tar­iffs, busi­ness and farmer groups dis­agree.

The lob­by­ing group Tar­iffs Hurt the Heart­land re­leased a re­port this week that found that U.S. con­sumers and busi­nesses have paid an ad­di­tional $38 bil­lion in tar­iffs between Fe­bru­ary 2018 and Septem­ber 2019 as a re­sult of the trade war.

“This data of­fers con­crete proof that tar­iffs are taxes paid by Amer­i­can busi­nesses, farm­ers and con­sumers — not by China,” said Jonathan Gold, spokesman for Amer­i­cans for Free Trade. “This is why re­mov­ing tar­iffs must be a part of the phase one deal.”

The trade war has in­flicted pain on both sides. U.S. tar­iffs now cover more than two-thirds of the prod­ucts it im­ports from China, while Chi­nese tar­iffs cover 58% of China’s im­ports from the United States, ac­cord­ing to track­ing by Chad Bown, a se­nior fel­low at the Peter­son In­sti­tute of Economics.

The trade war has con­tributed to a slow­down in China’s eco­nomic growth, while econ­o­mists have in­creas­ingly warned of the im­pact on the United States

Pre­vi­ous plans for Xi and Trump to meet on the side­lines of the Asia-Pa­cific Eco­nomic Co­op­er­a­tion sum­mit meet­ing in Chile in mid-Novem­ber were also thrown into dis­ar­ray when the Chilean gov­ern­ment can­celed the meet­ing be­cause of street protests.

Trump has ex­pressed a pref­er­ence for a sign­ing in the United States, but lo­ca­tions in Europe and else­where also have been con­sid­ered. Ad­min­is­tra­tion of­fi­cials say that talks are still pro­ceed­ing un­der roughly the orig­i­nal time­line, though the sign­ing could be de­layed some­what.

The United States and China were close to a deal in early May. But when the draft agree­ment was broadly dis­trib­uted within the Chi­nese lead­er­ship, its con­tents pro­voked wor­ries about the ex­tent of China’s con­ces­sions. China’s trade ne­go­tia­tors quickly de­manded ex­ten­sive changes in the agree­ment.

In­for­ma­tion for this ar­ti­cle was con­tributed by Ana Swan­son and Keith Brad­sher of The New York Times; by Sy­billa Gross of Bloomberg News; and by Joe McDon­ald and Christophe­r Ru­gaber of The As­so­ci­ated Press.



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