China to Grant Tariff Exemptions on 696 US Goods to Support Purchases

February 18, 2020 Updated: February 18, 2020
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BEIJING—China will grant exemptions on retaliatory duties imposed against 696 U.S. products, 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.

The announcement on Feb. 18 comes after the “phase one” trade deal between the two countries took effect on Feb. 14 and is the third round of tariff exemptions that 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 outbreak 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 restrictions on travel and transportation to curb the spread of the virus.

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 leader Xi Jinping told U.S. President Donald Trump during a recent call that China will still meet its phase one trade deal purchasing targets.

Beijing’s announcement on Feb. 18 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 exemptions.

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.

By Stella Qiu and Se Young Lee