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Phased tariff rollback agreement on the cards between China and the U.S.

Published on: November 8th, 2019

Toy manufacturers and importers await U.S. confirmation of dates of lifting of tariffs, as the Ministry of Commerce says negotiators had constructive talks.

China and the U.S. have agreed to roll back tariffs on each other’s goods in phases, as they work towards a deal between the two sides.

“In the past two weeks, top negotiators had serious, constructive discussions and agreed to remove the additional tariffs in phases as progress is made on the agreement,” said Ministry of Commerce spokesman Gao Feng. “If China and the U.S. reach a phase-one deal, both sides should roll back existing additional tariffs in the same proportion simultaneously based on the content of the agreement, which is an important condition for reaching the agreement,” he added.

Reaching such an understanding would represent significant progress in efforts to de-escalate the current trade war. China’s key demand since the start of negotiations has been the removal of punitive tariffs imposed by the U.S., which currently apply to the majority of its exports.

However, former White House adviser Stephen Bannon has claimed that rolling back earlier tariffs “goes against the grain” of the original October agreement. “There’s nothing that Trump hates more” than someone backtracking on a deal, he said.

The White House has not yet confirmed the decision, and the U.S. Trade Representative’s office has also declined to comment.

As the two sides continue to fine tune negotiations, the markets await U.S. confirmation of the lifting of tariffs, as well as a timetable for the roll back. “The question right now is what the two sides have actually agreed on — the market’s focus has shifted to how the U.S. may react to China’s tariff remarks tonight or in coming days,” said Tommy Xie, an economist at Oversea-Chinese Banking Corp.

The Trump administration has expressed optimism that phase one of a comprehensive trade deal will come together this month, news which has helped boost equity markets this week.

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