Last Thursday, China cut tariffs on $75 billion of U.S. imports including soybeans, pork and auto parts. This is considered part of a trade truce with Washington while China is struggling with a growing coronavirus outbreak.
The tariff cuts followed the signing of a "phase 1" trade deal late last year that halted the trade war between the world's two largest economies.
The Chinese Ministry of Finance stated that tariffs on some goods would be cut by half, from 5% to 2.5%, on February 14, the same day that last month's agreement between the two countries is set to take effect. The reductions apply to punitive tariffs imposed on 1,717 U.S. products by China in September.
This announcement came amid increasing concerns over whether China can still honor the terms of the phase one trade deal signed on Jan. 15, including a commitment to buy an additional U.S. $200 billion worth of American services and goods over the next two years.
"China is concentrating on battling coronavirus. The U.S. government should be flexible on China-U.S. phase one trade deal as a way to show goodwill to Chinese people working hard to contain the epidemic. I believe doing so will not harm President Trump's image among American public," Hu Xijin, editor in chief at the state-run tabloid Global Times, said on Twitter
On the other hand, last week white House trade advisor Peter Navarro pushed back against the idea that the U.S. would remove tariffs on Chinese imports if the deadly coronavirus begins to weigh on China's economy.
The coronavirus problem is already widely expected to hurt China's domestic economy. An estimated tens of millions of Chinese workers have been ordered to stay home on an extended Lunar New Year break in an effort to reduce the risk of human-to-human transmission of the disease. The lost hours of work will be significant in the aggregate and will clearly lower national productivity in 2020 and thus lower corporate revenues and earnings.
