China's Ministry of Commerce says Washington and Beijing agree to cancel tariff increases as trade talks progress
JOE McDONALD AP Business Writer
November 7, 2019 at 8:24 pm
4 min reading
Prospects appear to have brightened a preliminary breakthrough in the US-China trade war after both sides agreed to cut some punitive tariffs on each other's products as part of an initial deal.
A Chinese spokesman announced the development on Thursday as negotiations over the end of the trade war progressed – a development that triggered a recovery in the US stock markets.
The deal came during talks aimed at working out details of a "Phase 1" deal announced on October 12. Financial markets were shaken by reports that China was pushing for higher tariffs, which represented the prospect of a breakdown in negotiations. .
Negotiators have agreed to a "phasing out" of tariff increases if negotiations move forward, said Commerce Ministry spokesman Gao Feng.
"If both sides reach a 'Phase 1' agreement based on the content of that contract, the already increased tariffs should be canceled at the same time and in the same proportion," Gao told a news conference.
As for the size of the reductions, Gao said it would depend on the deal.
"Almost two years ago, the US-China trade dispute has been the biggest wind up against global growth," BMO Economics said in a research note. "But with promising signs of progress on the trade front, a shift in global central banks to ease … and above-expected corporate profits, US equities" are hitting all-time highs. "
On Wall Street, stocks advanced toward another record high following the encouraging report from Beijing. The Dow Jones Industrial Average rose nearly 200 points in late afternoon trading.
The governments of the two largest global economies have raised billions of dollars in tariffs on each other's products in the fight for China's trade surplus and technological ambitions. This weighs on world trade and threatens to depress corporate earnings and global economic growth, which is already showing signs of slowing down.
The Oct. 12 deal was modest and details have not yet been released, but it has been welcomed as a sign of progress towards ending the trade war.
President Donald Trump agreed to postpone a planned tariff increase, while lower-level officials worked out details.
Trump said China has agreed to buy up to $ 50 billion in US agricultural products. Beijing has not yet confirmed the scale of its commitment.
The news says Beijing wants 15% tariffs imposed in September on $ 125 billion of Chinese imports removed before it makes a formal commitment.
There was no indication that Trump would agree, which raised the possibility of another collapse in the negotiations.
Chinese imports of soybeans and other US products fell 26.4% in the first nine months of this year following tariff increases and requests from importers to find other suppliers.
The Oct. 12 deal helped ease financial market nervousness, but the two sides have not yet reported progress on major disagreements over technology and other irritants after 13 rounds of talks.
Trump and Xi were due to meet at this month's meeting of Asia Pacific leaders in Chile, but this event was canceled due to protests there.
This has lowered hopes that a face-to-face meeting can produce progress. But US officials say the two governments are looking for a different location.
US Secretary of Commerce Wilbur Ross said this week that any "Phase 1" deal would be general and would cover trade in specific areas such as soy and liquefied natural gas.
More complicated issues will be addressed in subsequent negotiations, Ross said. He gave no indication that reversing tariffs was a possibility at this stage.