It is expected that China plans to halve tariffs on 1,717 goods it imports from the US, as the country faces the latest concern of the coronavirus. According to Chinese officials, tariffs on some goods would be cut to 5% from 10% and on others from 5% to 2.5%.
Both the countries are facing long-running trade war by imposing tariffs on imported items. In this regard, last month a partial resolution was agreed with China promising to increase imported US goods by $200bn. This latest announcement to reduce tariffs is China’s first response to the ‘phase one agreement.’
China’s economy has been under additional pressure this year as the coronavirus outbreak threatens to disrupt the economy. The factories in China have remained closed and the manufacturing sector has faced an extreme drop in production. The tariff cuts, which cover $75bn of US goods coming into China, will take effect on 14 February. Tariffs remain on a further $35bn worth of US goods. The US would also roll back some tariffs on Chinese goods as part of the agreement.
This is a major step in reducing the tension between US-China trade war. The Finance Ministry of China believes that the step was taken to promote stable development of Sino-U.S. economic and trade relations.
Julian Evans-Pritchard, Senior China Economist at Capital Economics said: ”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.”