China announced on Thursday that it was cutting tariffs in half on hundreds of U.S. products worth tens of billions of dollars as China struggles to contain a deadly virus that has killed hundreds.
“The cuts follow last month’s signing of a ‘Phase 1’ agreement toward ending a long-running tariff war over Beijing’s technology ambitions and trade surplus. Both sides have made conciliatory gestures but the lingering dispute threatens to chill global economic growth,” The Associated Press reported. “The reductions follow American tariff cuts last month on Chinese goods. There was no indication Beijing altered its own cuts in response to the rising cost of efforts to contain a virus outbreak that have depressed business activity by closing factories, restaurants and shops.”
CNBC reported that the retaliatory tariffs on the U.S. goods “will be cut from 10% to 5%, and from 5% to 2.5% on others, according to a statement from China’s Ministry of Finance” and the adjustment will “take effect from 1:01 p.m on Feb. 14, it said, without specifying which time zone it was referring to.”
“The cuts apply to about $75 billion worth of imports from the U.S. that was slapped with tariffs on Sept. 1, 2019, according to a separate statement on the ministry’s website,” CNBC reported. “After the cut, duties on U.S. crude will be reduced to 2.5%, from 5%, and the tariff on soybeans will be trimmed by 2.5%.”
The Financial Times reported that the announcement by China “spurred a rally on global stock markets with Asian bourses rallying from deep losses on mounting concerns over the impact on China from the virus,” adding that “European shares also gained ground while US futures trading was indicating a firmer start to Wall Street.”
Fears have grown that the recent outbreak of the rapidly spreading coronavirus, which has infected roughly 25,000 people and killed well over 500, could harm U.S.-China trade relations.
The virus “is taking a heavy toll on China’s economy by halting factory work, grounding flights and disrupting supply chains,” The New York Times reported. “It is also likely to slow China’s progress in meeting the commitments it agreed to as part of the initial trade deal that the Trump administration signed with Chinese officials last month.”
“Economists have predicted a drag on global growth from the virus, at least in the short term. In the United States, Goldman Sachs analysts estimate a 0.4 percentage-point reduction in first-quarter economic growth, though that effect is likely to fade,” The Times added. “Those costs could quickly outweigh the economic benefits of the trade agreement. While the Trump administration has touted big economic gains from the pact, economists’ forecasts have been modest, since the deal leaves tariffs in place on more than $360 billion of Chinese goods.”
The Times noted that “privately, some Trump administration officials say that China may use the virus as an excuse to delay meeting its commitments, in hopes that Mr. Trump will ultimately be voted out of office this year.”
President Donald Trump tweeted about the virus outbreak at the end of the last month, writing: “Working closely with China and others on Coronavirus outbreak. Only 5 people in U.S., all in good recovery.”
Working closely with China and others on Coronavirus outbreak. Only 5 people in U.S., all in good recovery.
— Donald J. Trump (@realDonaldTrump) January 30, 2020