China to halve tariffs on $75bn US goods from February 14

China will halve tariffs on some $75bn of imports from the US later this month, the Ministry of Finance said in a statement on Thursday.

The cut will be effective from 1:01pm on February 14, Beijing time, according to the statement, the same time as the US will implement reductions in tariffs on Chinese products.

Chinese punitive tariffs on American goods from September 1 last year will be lowered, with the rate on some dropping to 5 per cent from 10 per cent, and the others to 2.5 per cent from 5 per cent.

Both nations said they would cut tariffs on the others’ goods as part of the phase-one deal which was signed last month. The world’s two biggest economies paused their trade war in January, although even with these changes, tariffs are in effect on large parts of the bilateral trade and there are numerous other points of friction in the relationship.

Other retaliatory tariffs China has imposed on US goods will remain, according to the statement. In the meantime, China will continue processing applications for tariff exemptions, it said.

The yuan extended gains after news on the tariff reduction, with the offshore rate advancing as much as 0.26 per cent to 6.9573 per dollar.

In the deal, China agreed to increase its imports from the US, including agricultural products and services, from 2017 levels by no less than $200bn over the next two years. China is set to release January trade data on Friday, providing a first glimpse of this year’s imports from the US.

Economists estimate overall trade in January likely contracted due to the Lunar New Year holiday, while the outbreak of the coronavirus is casting a cloud over the outlook for the coming months.

After the reduction, retaliatory tariffs on American crude oil will be lowered to 2.5 per cent from 5 per cent. Punitive tariffs on soybeans will go down to 27.5 per cent from 30 per cent, and to 30 per cent from 35 per cent for pork, beef, and chicken.

These rates are higher as these goods were also hit with tariffs in 2018, which will remain in place.

“China hopes that both sides can comply with and implement the agreement to enhance market confidence, promote development of bilateral economic ties and facilitate global economic growth,” according to the statement.