BEIJING – China will halve tariffs on some $75 billion (¥8.24 trillion) of imports from the U.S. later this month, reciprocating a U.S. action and likely satisfying part of their interim trade deal.
The cut will be effective from 1:01 p.m. on Feb. 14, China Standard Time, the Ministry of Finance said in a statement Thursday, the same time as the U.S. will implement reductions in tariffs on Chinese products. Chinese punitive tariffs on U.S. goods from Sept. 1 last year will be lowered, with the rate on some dropping to 5 percent from 10 percent and the others to 2.5 percent from 5 percent.
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 will remain in effect on large parts of bilateral trade and there are numerous other points of friction in the relationship.
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.
Under 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.
Some analysts said after the trade deal was struck that China may need to roll back some tariffs on U.S. goods such as soybeans and crude oil in order to meet its purchasing commitments.
China is set to release January trade data on Friday, providing a first glimpse of its imports this year from the U.S.
Economists estimate that overall trade in January was likely to have contracted due to the Lunar New Year holiday, while the outbreak of the new coronavirus is casting a cloud over the outlook for coming months.
After the reduction, retaliatory tariffs on American crude oil will be lowered to 2.5 percent from 5 percent. Punitive tariffs on soybeans will go down to 27.5 percent from 30 percent, and to 30 percent from 35 percent 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 Ministry of Finance statement.
The news was positive for financial markets, and comes as Beijing seeks to shore up investor and business confidence in China as the virus outbreak casts deep uncertainty over its economic outlook.
After the announcement, the yuan hit its highest in two weeks, while Asian stocks and Wall Street futures also rallied.
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