It looks like China is extending an olive branch to the U.S. as Beijing announced it will cut tariffs on $75 billion in U.S. imports starting later this month.
The Chinese Ministry of Finance made the announcement Thursday, which said Beijing moved to reduce the tariffs in order to “advance the healthy and stable development of China-U.S. trade,” according to a statement on the ministry’s website. The cuts will happen on Feb. 14, the same day the U.S. had previously agreed to slash tariffs on $120 billion in Chinese imports from 15% to 7.5%.
The Chinese cuts will only apply to additional tariffs the country enacted back in September 2019, and not on all the tariffs that have been applied since the trade war between Washington and Beijing began in 2018.
Here’s a breakdown of some of the highlights included in the announced cuts, per Reuters:
- Total tariffs on soybeans fall to 27.5% from 30%.
- Total duties on pork drop to 55% from 60%.
- Tariffs on beef go down to 30% from 35%.
- U.S. crude oil, which was first targeted in September, will be reduced to 2.5% from 5%.
The moves comes shortly after the U.S. and China inked phase one of a new trade deal, and Jevons Global CIO Kingsley Jones thinks it could mean China is ready to move on to further negotiations by extending this “olive branch.”
“Who knows the exact motivations, I mean that’s quite plausible, that they’re under (economic) pressure,” Jones told CNBC, likely referring to the coronavirus outbreak. “But I think the development is very welcome because you know, that language suggests that there is a bit of an olive branch here. And a bit of a desire to move forward beyond the phase one and possibly take on phase two.”
While phase one of the trade deal was a step forward, there are still some major sticking points surrounding accusations of Chinese IP theft by the U.S., and Kingsley thinks lowering these tariffs could “normalize relations” and get the two countries talking again.
“I think that would be good … if we can get these tariff barriers lowered, and get a normalization of relations that also includes some negotiation about those other sticking points, you know the IP and so on,” he said. “Then I think that’s very positive.”
Over the weekend, Beijing also announced it will suspend duties on U.S. goods it deems necessary to fight the coronavirus outbreak that has now killed over 560 people and infected another 28,000, who are mostly Chinese.
The U.S. still has tariffs that it has not reduced at all on $250 billion in Chinese imports.