U.S., China agree in principle to phase out tariffs, but difficult talks remain
News that the United States and China have agreed to gradually roll back some of the tariffs that the two sides have imposed in a raging trade war over the past two years is pushing U.S. stock market indexes to record highs on Thursday.
But analysts cautioned that the two sides still have a number of difficult issues to resolve before all the duties are removed and trade returns to normal.
Chinese Commerce Ministry spokesperson Gao Feng told reporters in Beijing that top negotiators from the two sides have had “serious and constructive discussions” on core issues that drove President Donald Trump to impose tariffs on more than $350 billion worth of Chinese goods and Beijing to respond by hitting about $110 billion of American exports.
“Both sides agreed to remove the additional tariffs imposed in phases as progress is made on the agreement,” Gao said. “If China and the U.S. reach a phase one deal, both sides should roll back existing additional tariffs in the same proportion simultaneously.”
The state-owned Xinhua News Agency said Beijing was also considering removing restrictions on poultry imports from the United States.
The Chinese government statement appears to confirm a POLITICO report earlier this week that Trump would cancel plans to impose tariffs on roughly $160 billion of additional Chinese goods on Dec. 15 and potentially lift tariffs on $112 million worth of Chinese goods that went into force on Sept. 1 as part of an initial deal with Beijing.
Neither the White House or the Office of the U.S. Trade Representative made any attempt to contradict Gao's remark, although they also did not issue any official comment.
The two sides are still far from a final deal, Derek Scissors, an analyst at the American Enterprise Institute, said in an email.
“We have enough to take 12/15 off, but not enough for 9/1 yet, in my view,” Scissors said.
Another person closely following the talks, but who asked not to be identified, said the Chinese statement did not strike him as news.
"If there are future agreements, there will be future reductions of tariffs," he said. "Duh."
Gao said he had no information about where or when an agreement would be signed.
The United States imports much more from China than China imports from the United States. As a result, the United States ran a record trade deficit of nearly $420 billion with China last year.
Trump, who could use a political win as his presidency is in jeopardy from an impeachment inquiry, has also been pushing for a meeting with Chinese President Xi Jinping to sign the phase one deal.
The two countries had been hoping to have a deal to sign in time for the now-canceled Nov. 16-17 APEC leaders meeting in Chile. The two sides have since been discussing other possible locations for a signing ceremony, while continuing negotiations on the phase one deal.
U.S. wants China to ramp up purchases of U.S. farm goods to $40 billion or $50 billion annually, while also opening up its financial services sector and increasing intellectual property protections.
“The Chinese have wanted the U.S. to say we are willing to lift all tariffs. Maybe we agreed to say that as part of Xi meeting Trump,” Scissors said. “But that by itself would be about as valuable as them promising to protect all intellectual property, someday.”
