(Bloomberg) — China will start accepting applications for tariff waivers on a wide range of American commodities as it seeks to show commitment to keeping its side of the trade deal with the Trump administration.
China’s Ministry of Finance on Tuesday published a list of 696 American products including soybeans, pork, beef, corn, wheat, crude oil and liquefied natural gas that will be eligible for relief from the retaliatory duties imposed by Beijing in its tit-for-tat trade war with Washington.
It’s an initial step by China in meeting its pledge to buy $200 billion of additional goods and services from the U.S. over the next two years as part of the phase one trade deal reached in January, including $95 billion worth of U.S. commodities. Beijing has already been issuing tariff waivers on an ad hoc basis for U.S. farm products, including soybeans, but this is the first time it has expanded the exemptions to include energy products, such as LNG and crude.
Companies that intend to purchase U.S. products on the list can apply for a wavier starting from March 2. Effective for one year once approved, the exemptions will apply to a particular volume of imports and any purchases exceeding that amount will still be subject to the retaliatory tariffs, according to the ministry’s statement.
China had already introduced tariff exclusions on some U.S. goods last year, including pharmaceuticals and lubricant oil. The new list is the most substantial so far and is heavily tilted toward commodities.
One of the purposes of introducing the policy is “to support companies to start purchasing and importing from the U.S. based on the market and commercial rules, so as to create the conditions for the implementation of China-U.S phase-one deal,” a separate statement on the finance ministry’s website said.
Without the waivers, the retaliatory tariffs mean U.S. imports are uneconomical for Chinese buyers, hindering efforts to reach the trade deal targets. Until now, firms had also been reluctant to purchase from the U.S. as they weren’t clear on how to proceed with the existing waiver applications, according Li Qiang, chief analyst with Shanghai JC Intelligence Co.
Still, the introduction of waivers are unlikely to lead to a drastic surge in buying, as the novel coronavirus outbreak has dashed China’s demand for energy products such as oil and natural gas.
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