China to buy $50 billion in US farm products in return for tariff concessions

Washington has set its terms for a trade deal with China, offering to suspend some tariffs on Chinese goods and cut others in exchange for Beijing buying more American farm goods, Reuters reported quoting US sources.

Beijing’s silence, however, fuelled questions over whether the two sides can come to a truce in their bitter trade war before a new round of tit-for-tat tariffs takes effect on Sunday.

Reuters reported the status of bilateral negotiations said the United States would suspend tariffs on US$160 billion on Chinese goods expected to go into effect on Dec 15 and roll back existing tariffs.

In return, Beijing would agree to buy US$50 billion in US agricultural goods in 2020, double what it bought in 2017, before the trade conflict started.

Both the White House and Beijing didn’t release any official statements, raising questions about whether the terms had been agreed by both sides.

The news helped cheer financial markets with the Chinese yuan surging to its highest in more than four months while shares rose in early Asian trade on Friday.  

Both countries need to make formal announcements to cancel or postpone the scheduled tit-for-tat tariffs on each other’s goods that are scheduled to take effect Sunday, however.

China has so far refrained from imposing unilateral tariffs on US imports but has matched any new round of tariffs implemented by Washington with retaliatory measures.

It is believed US negotiators were offering to cut existing tariffs on Chinese goods by as much as 50 per cent as well as suspend new tariffs that were scheduled to go into effect on Sunday in an attempt to secure a “Phase 1” deal first promised in October this year.

The US-China trade war has slowed global growth and dampened profits and investment for companies around the world. The US has announced US$28 billion in subsidies for farmers who are impacted by the trade war. China bought US$24 billion in US farm products in 2017, before the trade war started, according to US Department of Agriculture (USDA) figures.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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