"Big Move": Trump Praises China Tariff Exemptions As Trade Talks Approach

Daniel Fowler
September 12, 2019

Beijing's announcement comes as China and the U.S. get ready to meet in Washington in October for the next round of talks regarding the ongoing trade and tariff dispute.

The exemptions will apply to goods that include some anti-cancer drugs and lubricants, as well as the animal feed ingredients whey and fish meal, the Ministry of Finance said in a statement on its website yesterday.

Beijing said in May that it would start a waiver program, amid growing worries over the cost of the protracted trade war on its already slowing economy.

China introduced Wednesday it will exempt 16 classes of merchandise from USA tariffs, forward of a contemporary spherical of commerce talks subsequent month.

ING's Pang noted the United States had also exempted imports of 110 Chinese products from tariffs in July, including high-value products such as medical equipment and parts.

Significant US exports to China, like pork, soybeans and American-made cars, are among the goods that will still be hit by the hefty taxes.

"The exemption could be seen as a gesture of sincerity towards the US ahead of negotiations in October but is probably more a means of supporting the economy", Iris Pang of ING said in a report.

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Our house view is that the two countries are unlikely to reach a deal this year.

Over the past year, the world's two largest economies have imposed tariffs on billions of dollars worth of one another's goods. That has battered farmers and manufacturers on both sides and fueled fears a global economy that already was showing signs of a slowdown might tip into recession.

The South China Morning Post reported https://bit.ly/2manJ5q, citing an unidentified source, that China was expected to buy more agricultural products in hopes of a better trade deal with the United States. Tariffs of 25% imposed previously on $250 billion of Chinese goods are due to rise to 30% on October 1.

If exemptions are viewed as a form of concession, then the United States has given more.

But the standoff is a very close second, and more than half of companies surveyed said they were delaying or reducing further investment in China as a direct result of the tit-for-tat tariffs. Beijing responded by imposing duties of 10% and 5% on a range of American imports. The rest of the 15% tariffs applying to this tranche of goods will take effect on December 15.

Although Abe told Xi that Trump trusts the Chinese president, Xi continued to air his grievances about his USA counterpart, the diplomatic source told Kyodo News.

Chinese imports of US goods tumbled 22.5% in August from a year earlier and exports to the United States, China's biggest foreign market, fell 16%.

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