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China plans on cutting tariffs by half on 1,717 goods it imports from the US as part of a Phase 1 deal designed to deescalate the trade war between the world’s two largest economies.
The announcement comes as the country faces a huge greatest political challenge with handling the coronavirus outbreak — more than 28,000 people in China have been infected and the death toll rose to 563 on Wednesday.
According to a statement from China’s Ministry of Finance, retaliatory duties on certain U.S. goods will be cut from 10% to 5%, and from 5% to 2.5% on others. Duties on U.S. crude will drop to 2.5%, from 5%, while duties on soybeans will be cut by 2.5%.
However, tariffs still remain on another $35 billion worth of US goods.
The move was made to “advance the healthy and stable development of China-U.S. trade.”
In a second statement China’s Ministry of Finance said that the cut in tariffs corresponds with a decision by the US in January to cut tariffs by half on $120 billion of Chinese goods, scheduled for Feb. 14.
“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.”
Julian Evans-Pritchard, senior China economist at Capital Economics, commented on the timing of the tariff cuts. Evans-Pritchard was quoted by the BBC as saying: ”Perhaps they want to show goodwill and send the message that they are still committed to de-escalating trade tensions despite the coronavirus delaying the ramp-up in their imports from the US”.
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