On Thursday, China announced that it will begin cutting tariffs on $75 billion worth of U.S. imports in half as the country continues to fight the escalating coronavirus outbreak that began in late December, reported CNN.
The reduced tariffs will affect goods that China imposed tariffs on last September. Goods that were taxed an extra 10 percent at the time will be cut back to 5 percent, while goods that were taxed an extra 5 percent will be reduced to 2.5 percent. China’s State Council Tariff Commission added that tariffs on other U.S. imported goods will continue as is until they can work out exemptions, and part of their statement reads as follows.
“China hopes that both sides will abide by bilateral agreements and make an effort to implement relevant provisions so that we can boost market confidence, promote bilateral trade relations and global economic growth.”
The rollbacks were likely in response to the U.S. cutting back on tariffs it imposed on Chinese imported goods back in September during phase one of the trade deal.
Tommy Wu, an economist with Oxford Economics, believes that the announcement of reduced tariffs may assist in boosting market sentiment, especially at a time when China is battling with the economic impact of the coronavirus outbreak.
As previously reported by The Inquisitr, Chinese stocks took a large hit this week as the coronavirus raged on in the city of Wuhan — where it is thought to have originated — and across other areas in mainland China. The free-floating CSI Index, which consists of 300 A-share stocks listed on either the Shanghai or Shenzhen Stock Exchanges, reopened after the Lunar New Year on February 3 to drops reaching 9.1 percent and a loss of $393 billion for the Shanghai Stock Exchange. This is the worst opening the index has had in 13 years.
In response to the outbreak, Beijing put major Chinese cities on lockdown to avoid the spread of the virus. Big factories halted production as employees stayed home while millions of consumers cut back on purchases.
In January, Beijing agreed to import $200 billion worth of U.S. goods as part of a “phase one” trade deal between the two nations. Officials in Washington believe that the outbreak will delay exports of these U.S. goods.
U.S. President Donald Trump’s chief economic adviser, Larry Kudlow, believes that China will be delayed in meeting the agreed-upon trade deal because of the virus. U.S. Secretary of Agriculture Sonny Perdue also commented that the United States should be patient with China during this time as they may be incapable of fulfilling their end of the trade deal despite making efforts to do so.
According to Oxford Economics, the GDP growth forecast projected for China in 2020 has been reduced from 6 percent to 5.4 percent dependent upon a rebound in the second quarter.