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China calls off rise in tariffs on U.S. soybeans and pork as trade overtures resume

A soybean field this week in Bristol, Wis.
A soybean field this week in Bristol, Wis. (Tannen Maury/EPA-EFE/Shutterstock)
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China said on Friday it was canceling planned tariff increases on American soybeans and pork, the latest sign of a diplomatic thaw in the U.S.-China trade war that could lead to an interim agreement this fall.

Chinese importers in recent days resumed purchases of American soybeans for the first time since this spring, when Beijing called a halt in retaliation for tariffs President Trump had imposed on numerous Chinese products.

China now will “support domestic companies in the purchase of soybeans and pork from the U.S.,” state media outlets reported Friday, citing an unnamed official.

“We seem to be back in the ballgame of doing business with the Chinese,” said Jim Sutter, chief executive of the U.S. Soybean Export Council in Chesterfield, Mo.

The soybean move capped three days of unexpected improvement in a U.S.-China relationship that had run aground. On Wednesday, China eased tariffs on 16 U.S. products, including alfalfa and lubricant oils. Trump responded by delaying a planned Oct. 1 U.S. tariff increase on $250 billion of Chinese goods by two weeks, to avoid conflicting with Beijing’s plans to celebrate the 70th anniversary of the Chinese revolution.

Trump delays increase in tariffs on Chinese goods by two weeks ‘as a gesture of good will’

With the two governments deeply suspicious of each other after more than a year of fruitless jousting, there is little prospect for reaching the sprawling agreement that Trump once billed as “the granddaddy of them all” any time soon.

Instead, the recent flurry of reciprocal moves suggested that the two sides might try to escape their deepening conflict by agreeing first on a partial deal while continuing talks aimed at a comprehensive settlement.

James Green, who until last year managed trade issues for the U.S. Embassy in Beijing, said Chinese officials believe a partial accord would boost President Xi Jinping’s image domestically for managing the difficult U.S. relationship and make China look like a responsible actor on the global stage.

“I think the Chinese side wisely decided that some partial agreement would serve their interests,” he said.

While some analysts have suggested that Trump may feel pressure to seek a partial deal amid complaints that the trade war is hurting the economy, that is not how China hawks in the White House see it.

In their view, the Democratic presidential candidates, while critical of Trump’s handling of the trade war, struggled in Thursday night’s debate to articulate a clear alternative.

Recent economic data, including Friday’s retail sales figures, have been strong, and the stock market has recovered after a late-2018 plunge. The administration feels it is close to securing congressional approval of the U.S.-Mexico-Canada trade deal and is closing in on pacts with Japan and India.

“An interim deal would be opposed by some in the Trump administration who would see it as giving up leverage, but it would be welcomed by the business community,” said John Frisbie, managing director of the consultancy Hills & Co. “A full deal might be too big a task right now, given the level of distrust between the two sides.”

Still, Trump and his senior officials have made inconsistent statements on prospects for an interim deal involving a rollback of tariffs in return for accelerated Chinese purchases of American products and commitments to strengthen intellectual-property safeguards.

“I’d rather get the whole deal done,” Trump told reporters Thursday before flying to Baltimore. “We’ve taken in many, many billions of dollars of tariffs. I’d rather get the entire Chinese done — look, if we’re going to do the deal, let’s get it done.”

“A lot of people are talking about it,” the president said, “and I see a lot of analysts are saying an interim deal, meaning we’ll do pieces of it — the easy ones first. But there’s no easy or hard. There’s a deal or there’s not a deal. But it’s something we would consider, I guess.”

U.S. and Chinese negotiators by early May had agreed on 90 percent of a trade deal that stretched beyond 150 pages, according to Treasury Secretary Steven Mnuchin. But Xi balked at enshrining key provisions in the country’s legal code, leading to the talks’ collapse, according to U.S. officials.

Since then, relations have deteriorated as Trump lashed out with additional tariffs and barred Huawei, one of China’s most prominent global firms, from purchasing American computer chips, triggering Chinese retaliation.

The Chinese and American presidents agreed in Osaka, Japan, to revive the talks at the end of June. But despite a trip to Shanghai by Mnuchin and Robert E. Lighthizer, the chief U.S. trade negotiator, the two sides remain far apart.

Frustrated by the lack of progress, Trump last month announced further tariff increases that would apply by mid-December to nearly every product the United States imports from China.

“Investors have been pummeled by the Trump administration trade moves so much they have gotten whiplash,” Andrew Collier, managing director of ­Orient Capital Research in Hong Kong, said via email. “However, there is a growing consensus that Trump needs a deal in order to help the economy before the election in 2020. . . . He will probably agree to concessions on China market access and purchase of U.S. goods and call it a win. China would be happy to get the trade war behind them and focus on their real problem — the slowing economy.”

Working-level discussions between U.S. and Chinese officials are scheduled for next week in Washington. Assuming they go well, Chinese Vice Premier Liu He is scheduled to meet with Lighthizer and Mnuchin in Washington during the first half of October.

James Zimmerman, the former chairman of the American Chamber of Commerce in China, called the latest Chinese move “a gesture, but not an incredibly significant one . . . an unsteady truce before the October round of negotiations.”

China has long offered to buy soybeans from farmers, part of Trump’s voter base, to appease the president and narrow the trade deficit, a measurement Trump cites frequently.

Shih reported from Beijing.

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