China and Trump Exchange Goodwill Gestures on Tariffs

Clay Curtis
September 13, 2019

American soybean farmers have been hit particularly hard by the trade war. Those target farm states that supported Trump in the 2016 presidential election.

American farmers have borne the brunt of the US-China trade spat, especially after US soy exports collapsed last year, virtually wiping out foreign markets farmers had spent years cultivating. I deal with them and I know them and I like them. "It's something we would consider I guess", he said. There's a deal or there's not a deal.

Nevertheless, some analysts view the move as a friendly gesture by China ahead of talks with the US.

When U.S. President Donald Trump announced Wednesday he was delaying another planned tariff hike on Chinese imports, he framed it as a "gesture of goodwill".

Deputy trade negotiators are due to meet in Washington in mid-September, with minister-level talks to follow in October. US soybean sales to China in 2018 dropped 74% from the previous year to a 16-year low.

We "expect and we want them to buy agriculture". Meeting those demands would require structural change that it is unclear China would be willing to undertake.

The discussions come amid growing evidence that the Chinese, U.S. and global economies are feeling the negative effects of the disputes.

Financial markets were rattled in August as the trade conflict escalated yet again, heightening worries that more tariffs and a slowing global economy could bump the USA into a recession.

Still, global stocks rose on Thursday after the conciliatory gestures from both sides.

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China has imposed several rounds of duties on U.S. goods in retaliation against U.S. Section 301 tariffs, beginning a year ago in July and August with a 25 per cent levy on about $50 billion of U.S. imports. In 2018, the United States goods trade deficit with China was $419.52 billion.

"The next month is important", Mnuchin said at a later event hosted by the New York Times.

"It's a thing that individuals chat about, I'd like to get the entire offer carried out", he claimed.

National security issues have not, however, been a key topic in the trade talks so far. Some have been hit with increases a couple of times, while about $50 billion of US goods is unaffected, possibly to avoid disrupting Chinese industries. Duties were raised an additional 5% this month.

A Commerce Ministry spokesman said on Thursday that the importers were asking U.S. suppliers for prices of soybeans and pork.

Both Trump and Chinese leader Xi Jinping have sought to lower tensions in recent weeks as the world's biggest economies see growth slowdown, with the US delaying a planned hike in tariffs until mid-October. "(China) hopes both sides would continue to meet each other half way and adopt concrete actions to create favourable conditions for negotiations", Gao said. The world's biggest pork consumer has hiked imports to make up the shortfall. The exemption, which covers two lists with 16 categories of goods, will be valid from September 17, 2019 to September 16, 2020, the China's Customs Tariff Commission of the State Council said in a statement.

That would return the status of US tariffs to about $250 billion in Chinese goods and mark the first time the Trump administration has reduced tariffs on China since they were introduced a year ago.

If the USA proceeds with its threat to impose tariffs on an additional $300billion (R4 trillion) worth of Chinese goods, it could lead to a global recession in as little as nine months - that is, according to the chief economist at Morgan Stanley, Chetan Ahya.

The Commerce Ministry's announcement on Friday follows a move earlier this week to exempt a range of American goods from 25 per cent extra tariffs put in place previous year, as the government seeks to ease the impact from the trade war.

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