After an apparent conciliatory move by China, US President Donald Trump on Wednesday made one of his own, announcing that he agreed to delay an increase in tariffs on $250 billion worth of Chinese goods by two weeks.
Speaking weeks ahead of the resumption of talks aimed at resolving a grinding trade war, Trump said the tariff delay was requested by Beijing.
Top negotiators expect to reconvene in Washington early next month after an acrimonious summer in which trade relations deteriorated sharply and both governments announced waves of new tariffs in a stand-off that is dragging on the global economy.
“We have agreed, as a gesture of good will, to move the increased Tariffs on 250 Billion Dollars worth of goods (25% to 30%), from October 1st to October 15th,” Trump tweeted late Wednesday.
He said the delay was requested by “Vice Premier of China, Liu He, and due to the fact that the People’s Republic of China will be celebrating their 70th Anniversary,” on October 1.
Early Wednesday, Beijing announced it was temporarily exempting some US exports from tariff increases, a gesture that lifted equity markets long buffeted by the ups and downs in the conflict now entering its second year.
“It was a big move,” Trump told reporters at the White House. He reiterated that Beijing was under pressure to strike a bargain as its economy weakens, which he attributed to US actions.
However, the goods exempted do not include high-profile agricultural items like soybeans and pork that could be crucial to the ultimate success of any agreement.
The exemptions will become effective on September 17 and be valid for a year, according to the Customs Tariff Commission of the State Council, which released two lists that include seafood products and anti-cancer drugs.
The lists mark the first time Beijing has announced products to be excluded from tariffs.
Other categories that will be spared include alfalfa pellets and fish feed, and the commission said it was also considering further exemptions.
Both sides imposed fresh tit-for-tat tariffs on September 1, adding to the duties that now cover hundreds of billions of dollars’ worth of goods.
Trump initiated the trade war complaining that China engaged in unfair trade practices.
“These adjustments signal that China is more willing to make progress in the October trade talks, likely toward striking a ‘narrow’ agreement that involves China buying more US goods in exchange for the US suspending further tariff hikes,” Barclays analysts said in a research note.
They said Beijing had been sounding a more “constructive” note in recent weeks over trade relations.
But US businesses in China are increasingly pessimistic about their prospects.
A report released Wednesday said growing numbers of companies expect their revenues and investment in the local market to shrink.
The American Chamber of Commerce in Shanghai’s report said 47 percent surveyed said they expected to increase their investments in China in 2019, down from 62 percent last year.
Three-quarters of businesses surveyed said they opposed the use of punitive tariffs by the United States to force China into a trade deal.
China’s economy grew 6.2 percent on-year in the second quarter, the lowest rate in nearly three decades – a fact Trump highlighted on Wednesday.
Auto sales in China fell by 6.9 percent in August compared with the previous year, an official industry association said Wednesday, extending a slump.
Trump has said the protracted trade war is damaging China more than the United States, and China is “eating the tariffs.”
But experts have warned there are signs the US is also feeling the pinch, with job creation slowing across major industries last month.
Wall Street added to gains after Trump spoke, reflecting renewed hope an agreement could be reached to end the trade war.
The benchmark Dow Jones Industrial Average jumped 0.9 percent to close at 27,137.04.