China to Halve Tariffs on $75B of US Goods
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China will halve tariffs on some $75 billion of imports from the United States later this month, reciprocating a U.S. action and likely satisfying part of the interim trade deal.
The cut will be effective from 1:01 p.m. on Feb. 14, Beijing time, according to a Ministry of Finance statement Feb. 6, the same time the U.S. will implement reductions in tariffs on Chinese products. Chinese punitive tariffs on American goods from Sept. 1 last year will be lowered, with the rate on some dropping to 5% from 10%, and the others to 2.5% from 5%.
Both nations said they would cut tariffs on the others’ goods as part of the phase-one deal that was signed last month. The world’s two biggest economies paused their trade war in January, although even with these changes, tariffs are in effect on large parts of the bilateral trade and there are numerous other points of friction in the relationship.
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Other retaliatory tariffs China has imposed on U.S. goods will remain, according to the statement. In the meantime, China will continue processing applications for tariff exemptions, it said.
The yuan extended gains after news on the tariff reduction, with the offshore rate advancing as much as 0.26% to 6.9573 per dollar.
In the deal, China agreed to increase its imports from the U.S., including agricultural products and services, from 2017 levels by no less than $200 billion over the next two years. China is set to release January trade data Feb. 7, providing a first glimpse of this year’s imports from the U.S.
Economists estimate overall trade in January likely contracted due to the Lunar New Year holiday, while the outbreak of the coronavirus is casting a cloud over the outlook for the coming months.
After the reduction, retaliatory tariffs on American crude oil will be lowered to 2.5% from 5%. Punitive tariffs on soybeans will go down to 27.5% from 30%, and to 30% from 35% for pork, beef and chicken. These rates are higher as these goods were also hit with tariffs in 2018, which will remain in place.
“China hopes that both sides can comply with and implement the agreement to enhance market confidence, promote development of bilateral economic ties and facilitate global economic growth,” according to the statement.
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