China on Thursday announced it would cut in half some of the retaliatory tariffs on $75 billion worth of U.S. goods it imposed last September “to promote the healthy and stable development of Sino-U.S. economic and trade relations,” according to Beijing’s Ministry of Finance.
The tariff cuts, set to take effect on Feb. 14, apply to 10 percent tariffs on roughly 900 items and 5 percent tariffs on 800 items, which will be dropped to 5 percent and 2.5 percent, respectively.
Any additional tariff adjustments will depend on future developments in the U.S.-China relationship, a Finance spokesperson said, with the ultimate goal of eliminating all U.S.-China tariffs. “The next step of adjustment depends on the development of the Sino-U.S. economic and trade situation,” the spokesperson said. “We hope to work with the United States towards the ultimate elimination of all tariff increases.”
China’s tariff cut will take effect on the same day the U.S. will halve 15 percent tariffs on about $120 billion worth of Chinese goods. The U.S. and China signed a phase-one trade agreement on Jan. 15 that goes into effect on Fe. 14; the U.S. agreed to cut some tariffs as part of that deal but will leave in place 25 percent tariffs on $250 billion worth of Chinese goods.
Beijing did not commit to any tariffs cut as part of the agreement, but agreed to up its purchases of U.S. goods and services by $200 billion from a 2017 baseline over two years. U.S. Trade Representative Robert Lighthizer said he expected China to exempt some U.S. goods from tariffs so it could meet those purchasing commitments.
The potential impact of the coronavirus on the Chinese economy has dampened hope that Beijing will be able to hit its purchasing targets. The deal includes a provision that allows a member to not meet its commitments in the event of a natural disaster or similar unforeseen event, and China believes the coronavirus
Source: Inside Trade