China Lifts Tariffs on Some U.S. Goods in Modest Olive Branch to Trump

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BEIJING — Beijing extended a modest olive branch to President Trump on Wednesday amid the continuing trade war between the United States and China, publishing a short list of products to be spared from retaliatory tariffs on American-made goods.

The list did not include major items like soybeans and other agricultural goods that the Trump administration would most likely want to see excluded from such tariffs before agreeing to a trade deal.

Cancer drugs, lubricants, pesticides and shrimp meal were among the products that will be exempt when tariffs are imposed on a host of American goods next week, China’s Ministry of Finance said in a statement on its website. China had threatened to place tariffs on many of the goods last year as the trade war began to heat up.

The products covered by the announcement will not face tariffs for a year starting next Tuesday, and tariffs already imposed on the products will be refunded, the ministry said, adding that additional exemptions would be announced in the coming weeks.

The announcement came as China’s top trade negotiator, Liu He, and senior Trump administration officials, prepare to meet next month in Washington. Despite the revival of talks, resolving the trade dispute will probably be difficult, given Mr. Trump’s vow to raise tariffs on $250 billion in Chinese goods, including cars and aircraft parts, to 30 percent from 25 percent on Oct. 1.

To reach a deal, the Trump administration has indicated that China would have to take steps to de-escalate trade tensions. Beijing’s announcement on Wednesday could be interpreted as such a step.

“We hope that the U.S. can show sincerity and good faith, and work together with China to create favorable conditions and atmosphere to properly resolve the trade issues through negotiations based on equality and mutual respect,” Hua Chunying, a spokeswoman for China’s foreign ministry, said at a news conference on Wednesday.

Asked for more details about the decision to spare some American products, Ms. Hua said it would be up to China’s finance ministry to elaborate.

Mr. Trump responded to the announcement with a morning Twitter post that suggested he believed the move showed Beijing’s resolve weakening.

“China suspends Tariffs on some U.S. products,” he wrote. “Being hit very hard, supply chains breaking up as many companies move, or look to move, to other countries. Much more expensive to China than originally thought.”

Negotiators for the two countries hope to reach a relatively modest deal in the coming weeks that would have China buy more American farm products in exchange for the United States lifting some restrictions on the Chinese telecommunications giant Huawei. Such an agreement could help lay the groundwork for a broader deal.

Trade talks broke down in May, and a short time later the White House put Huawei on a blacklist that would block its access to microchips and other critical technology made by American companies. Since then, China and the United States have traded barbs and put tit-for-tat tariffs on billions of dollars’ worth of goods.

The finance ministry’s announcement coincided with a visit to Beijing by American business executives who are meeting with senior Chinese government officials in hopes of fostering a dialogue on the topic of trade. American firms that operate on both sides of the Pacific are increasingly uneasy about the state of relations between the two countries.

Some technology companies have expressed frustration over the Trump administration’s decision to thrust Huawei into the trade dispute. Companies like Google, Facebook and Microsoft are examining their businesses in an effort to understand the scope of the blacklist. Systems made by Google and Microsoft, for example, are used in Huawei phones around the world.

Only Microsoft has defended Huawei publicly.

“To tell a tech company that it can sell products, but not buy an operating system or chips, is like telling a hotel company that it can open its doors, but not put beds in its hotel rooms or food in its restaurant,” Brad Smith, Microsoft’s president, told Bloomberg in an interview, referring to the restrictions on Huawei.

“Either way,” he added, “you put the survival of that company at risk.”

On Wednesday, the American executives met with Premier Li Keqiang for more than an hour, according to Myron Brilliant, the executive vice president of the United States Chamber of Commerce, which organized the visit with the China Center for International Economic Exchanges.

Mr. Li told the group that China would move to liberalize and reform its economy to make it more open to foreign businesses. The executives told Mr. Li they were interested in investing more money in China.

The Chinese economy is facing strong headwinds, with growth slowing and the country’s debt problems mounting. Mr. Li acknowledged in the meeting with the American executives that the longer the trade war goes, the more of an impact it will have on the economies of both China and the United States economy, Mr. Brilliant said.

He called China’s decision to lift tariffs on some American goods “encouraging.”

“We were looking for signals and we got a pretty positive signal from the premier,” Mr. Brilliant said. “Now we’ll see what that means. We’ll see how it plays out.”

The move to suspend some tariffs may have been geared as much toward helping Chinese consumers and companies as it was toward offering a small concession to the Trump administration.

A number of the items on the exemption list, including cancer drugs, are considered important by the Chinese government. Although Beijing has made innovation in pharmaceuticals a national priority, China’s ability to develop new drugs is in the earliest stages compared with the global industry. And demand for lifesaving drugs is growing as China’s residents age and have more chronic diseases, like cancer.

Many Chinese people seeking lifesaving drugs buy them from Hong Kong and Macau, Chinese territories that operate under different laws than the mainland. Online forums are devoted to discussing smuggling generic drugs from India. In August, the government said it would reduce the penalties for selling and importing unapproved drugs, effectively giving critically ill patients approval to get cheaper, generic medicines from other countries.

But Beijing has also signaled a potential willingness to make sacrifices to target parts of Mr. Trump’s political base, like farmers. Livestock was not on the list of goods to be excluded from the tariffs next week, despite a severe shortage of pork caused by a fast-moving virus that has devastated millions of Chinese pigs. (Soybean products used in animal feed also did not make the list.)

China released data this week showing that the price of pork had jumped nearly 50 percent in the past year. In recent weeks, Chinese officials have encouraged farmers to raise new pig farms, while releasing frozen pork from the country’s strategic reserves to help counter some of the surge in prices.

This article is from NYT – go to source

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