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 $75 billion of goods hit by Chinese tariffs of 5 per cent to 10 per cent tariffs that came into effect on Sept. 1.