The new China tariff waivers for some US imports will take effect on May 19 and end on May 18, 2021. There are currently 79 US goods eligible for the waivers.
On Tuesday, China unveiled a new list of US products that will be free from waivers imposed during the bilateral trade war. Beijing faces pressure to increase imports from the United States.
In a statement, China’s finance ministry said the new waivers will start this May 19 and expire in the same month next year. Among the products in the list are ores of rare earth metals, silver ores, gold ores, and concentrates.
Last week, Beijing and Washington’s top trade negotiators agreed on the implementation of the Phase 1 deal signed in January. The deal obliges China to boost its purchases of US goods from a 2017 baseline by $200 billion over two years. It entails around $77 billion worth of goods in the first year and $123 billion in the following year.
The coronavirus pandemic further heightened tensions between the US and China, where the virus originated.
US President Donald Trump once warned about the possible termination of the deal if China does not fulfill its purchase obligations.
China’s Global Times, the official newspaper of the ruling Communist Party, announced on Monday that some officials were calling for the nullification of the trade deal and enter a new negotiation that is more favorable to China.
Forecasts on China’s purchase of US goods
The think tank Center for Strategic and International Studies (CSIS) predicts that the coronavirus pandemic will not allow China to meet its obligations in terms of purchases of US goods as part of their “phase one” trade deal.
Based on their forecasts, exports of US goods to China may only reach $60 billion for all of 2020. This is reportedly lower than the $186.6 billion requirement to fulfill the agreement that both countries entered last January.
Chinese purchases of US goods may increase before the year ends. But any increases still “will not change the overall picture, just the details,” said Scott Kennedy, trustee chair in Chinese business and economics at CSIS, in a report.
“The targets were never realistic; they were just gaudy numbers meant to impress. The pandemic made the unrealistic the impossible,” he said.
There are factors that cause the decline in US goods exports to China during the early part of 2020. These are the decline of energy exports by 33.3% and low sales of commercial aircraft. Moreover, sales of automobiles dropped by 46.9%, and soybean exports were lower by 39.4%.
Based on the phase one trade deal, China will buy an additional $200 billion in US goods and services by 2021. With this, US goods and services exports to China must reach about $290 billion in 2020 and $330 billion in 2021, based on the agreement from the US Trade Representative.
Top officials from China and US agreed on keeping the trade deal intact. However, Trump said he was “very torn” about whether to terminate the agreement.
