China to halve some tariffs on US goods

China to halve some tariffs on US goods
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China on Thursday announced that it will halve tariffs on some $75 billion in U.S. imports starting Feb. 14, reciprocating a move the U.S. took as part of January's "Phase One" trade deal.

In that deal, President TrumpDonald TrumpRealClearPolitics reporter says Freedom Caucus shows how much GOP changed under Trump Jake Ellzey defeats Trump-backed candidate in Texas House runoff DOJ declines to back Mo Brooks's defense against Swalwell's Capitol riot lawsuit MORE halved the rate of tariffs he imposed in September. China said it would react accordingly, trimming the tariffs it has imposed on U.S. imports in half.

"To ease economic and trade tensions and expand cooperation, the Chinese side decided to adjust related measures accordingly," an article on the Chinese Finance Ministry's website said.

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"Further adjustment will mainly depend on future development in the economic and trade relations between the two countries. It is our hope that both sides will work together toward ultimately removing all additional tariffs," it continued.

While the U.S. agreed to halt scheduled tariffs and reduce some existing ones as part of the deal, China had not specifically committed to dropping any of its own import taxes.

Instead, it promised to increase its purchases of U.S. goods and services by $200 billion. The move to halve the 10 percent and 5 percent tariffs could be a step toward achieving that goal.

Treasury Secretary Steven MnuchinSteven MnuchinThe Hill's Morning Report - Presented by Goldman Sachs - Biden rallies Senate Dems behind mammoth spending plan Mnuchin dodges CNBC questions on whether Trump lying over election Democrats justified in filibustering GOP, says Schumer MORE said Thursday that the move was a result of the deal.

"This is part of China implementing Phase One," he said on Fox Business.

Trade watchers are skeptical that China will be able to successfully boost its purchases by that level, and some have argued that the U.S. may not be able to boost its production to meet the new demand. Exporters, they say, may simply redirect their products to China as opposed to other destinations.

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The coronavirus epidemic, which has led to quarantines and tamped down demand, may also make the goal harder to reach.

The Economist Intelligence Unit estimated that the virus would lop 0.5 percentage points off China's growth rate for the year, reducing it from a projected 5.9 percent to 5.4 percent.

Mnuchin said the outbreak and its response were not yet affecting supply chains in a serious way, but said more information was needed to definitely say how the outbreak would affect the U.S. economy.

"I think we'll have a much better idea in another week or two as we monitor how the virus spreads," he said.

At the same time, President Trump is scheduled to impose a much smaller wave of new tariffs on steel and aluminum products, which are expected to hit some $72 million of Chinese imports, among others. 

--Updated at 11:04 a.m.