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China to grant tariff exemptions on 696 U.S. goods to support purchases

February 19, 2020

Editors note: China reducing tariffs is only a fraction of the issue. Since the government makes purchasing decisions, little matters except whether the government actually makes the decision to purchase.

BEIJING (Reuters) - China will grant exemptions on retaliatory duties imposed against 696 U.S. goods, the most substantial tariff relief to be offered so far, as Beijing seeks to fulfill commitments made in its interim trade deal with the United States.

[Stella Qui & Se Young Lee | February 17, 2020 | Reuters]

Tuesday’s announcement comes after the Phase 1 trade deal between the two countries took effect on Feb. 14 and is the third round of tariff exemptions China has offered on U.S. goods.

China has committed to boosting its purchases of goods and services from the United States by $200 billion over two years as part of the agreement, and has already rolled back some additional tariffs on U.S. imports after the deal was signed.

U.S. goods eligible for tariff exemptions include key agricultural and energy products such as pork, beef, soybeans, liquefied natural gas and crude oil, which were subject to extra tariffs imposed during the escalation of the bilateral trade dispute.

The coronavirus epidemic that emerged late last year in China has raised concerns about its ability to meet the purchasing targets, however. Authorities throughout the country imposed major restriction on travel and transportation to curb the spread of the virus, which has killed nearly 1,900 and infected more than 70,000 in the country.

The containment efforts have kept factories shut or operating with drastically reduced staff, hitting production. The public has also been discouraged from leaving their homes or going to public places, also stunting consumption.

White House adviser Larry Kudlow said earlier this month that Chinese President Xi Jinping told U.S. President Donald Trump during a recent call that China will still meet its Phase 1 trade deal purchasing targets.

Beijing’s announcement on Tuesday emphasized that Chinese firms will submit applications for tariff exemptions based on market conditions and commercial considerations.

“Unless the state forcefully asks firms to apply for tariff exemption and buy U.S. soybeans, crushers would still go for Brazilian beans, based on market free will,” said a trader, adding that Brazilian beans are of good quality and price this year.

Other products subject to exemption on additional tariffs imposed include denatured ethanol and wheat, corn and sorghum. Some medical devices and metals including copper ore and concentrates, copper scrap and aluminum scrap are also subject to exemption.

Pharmaceutical products such as recombinant human insulin and some antibiotics are also among U.S. products eligible for tariff exemptions.

Firms can start submitting their applications on March 2, and any exemptions granted will be valid for one year.

Reporting by Stella Qiu, Hallie Gu, Dominique Patton, Tom Daly, Min Zhang, Yawen Chen and Lusha Zhang; Writing by Se Young Lee; Editing by Jacqueline Wong

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