China is considering a US request to shift some tariffs on key agricultural goods to other products so the administration of US President Donald Trump can sell any eventual trade deal as a win for farmers ahead of next year’s election, people familiar with the situation said.
The step would involve Beijing moving the retaliatory duties it imposed in July last year on US$50 billion of US goods to non-agricultural imports, said the people, who asked not to be identified because the discussions were private.
The shift is because the US does not intend to lift its own duties on US$50 billion of Chinese imports even if an agreement to resolve the trade dispute between the two nations is reached, one of the people said.
Another person said China would consider shifting the tariffs to make it easier to meet a proposal to buy an additional US$30 billion a year more of US agricultural goods on top of pre-trade dispute levels as part of a final deal.
In July last year, China levied punitive tariffs on US goods including soy, corn, wheat, cotton, rice, beef, pork and poultry in response to US duties.
A spokesperson for US Trade Representative Robert Lighthizer did not immediately respond to a request for comment.
The Chinese Ministry of Commerce did not respond to faxed questions.
The bartering shows that both sides are taking political considerations into account as negotiations continue on ending the trade dispute, which has rattled financial markets for months.
An outcome that completely removes punitive tariffs looks increasingly unlikely as Trump looks to hone his campaign message and continues to threaten the EU, India and other nations with trade actions.
The people did not specify which other goods would receive higher tariffs instead of agricultural products. Other top imports included aircraft engines and parts, semiconductors, passenger vehicles and chemicals.
China might also take action on non-tariff barriers that have affected agricultural goods.
The Chinese Ministry of Commerce in Beijing on Monday said that it would review whether to continue anti-dumping and anti-subsidy measures on US distillers’ dried grains, a by-product of corn ethanol production that is used in animal feed.
Over the weekend, US Secretary of the Treasury Steven Mnuchin said that the US and China were “hopefully getting very close to the final round” and discussing whether to hold more in-person trade talks.
He also said the US is open to facing “repercussions” if it does not live up to its commitments in a potential trade deal, a sign that the two sides are edging closer to an accord.
Under the proposed agreement, China would commit by 2025 to buy more US commodities, including soybeans and energy products, and allow 100 percent foreign ownership for US companies operating in China as a binding pledge that can trigger retaliation from the US if left unfulfilled, people familiar with the situation said earlier this month.
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