China and the US have agreed to roll back tariffs on each other’s goods in phases as they work toward a trade deal between the two sides, Chinese Ministry of Commerce spokesman Gao Feng (高峰) said yesterday.
“In the past two weeks, top negotiators had serious, constructive discussions and agreed to remove the additional tariffs in phases as progress is made on the agreement,” Gao said.
“If China [and the] US reach a ‘phase one’ deal, both sides should roll back existing additional tariffs in the same proportion simultaneously based on the content of the agreement, which is an important condition for reaching the agreement,” he said.
If confirmed by the US, such an understanding could help provide a road map to a deal de-escalating the trade dispute that has cast a shadow over the world economy.
China’s key demand since the start of negotiations has been the removal of punitive tariffs imposed by US President Donald Trump, which by now apply to the majority of its exports to the US.
Stocks rallied, with Hong Kong’s Hang Seng Index climbing 0.6 percent. European shares and US stock futures jumped. The yuan strengthened.
“The question right now is what the two sides have actually agreed on — the market’s focus has shifted to how the US may react to China’s tariff remarks tonight or in coming days,” Oversea-Chinese Banking Corp Ltd (華僑銀行) economist Tommy Xie (謝東明) said. “Investors are still cautious.”
The two sides continue to negotiate over where and when a “phase one” deal would be signed.
Gao said that he had no further information on the location or timing.
US locations for a meeting between Trump and Chinese President Xi Jinping (習近平) that had been proposed by the White House, including Iowa and Alaska, have been ruled out, a person familiar with the matter said.
Locations in Asia and Europe are being considered instead, the person said, asking not to be identified because the discussions are private.
China yesterday sentenced three nationals to maximum punishments for smuggling fentanyl to the US, in one of its highest-profile moves yet against the illicit flow of opioids that Trump has made a bone of contention in broader trade talks between Washington and Beijing.
In another trade-related move, the Chinese General Administration of Customs and the Chinese Ministry of Agriculture are studying the removal of curbs on US poultry imports, Xinhua news agency reported, without further details.
Trump administration officials have expressed optimism that phase one of a comprehensive trade deal might come together this month, helping boost equity markets to records this week.
Given repeated reversals in the more than year-long trade spat, investors are waiting for further confirmation of progress between the two sides.
“I am skeptical on how fast the progress will be,” ING Bank NV economist Iris Pang (彭藹嬈) said.
“How fast the roll back will be is critical to get material and long lasting positive sentiment for the market, as well as for both economies,” she said.
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