China slashes tariffs on $75bn of US goods as trade war enters truce

Beijing halves taxes on hundreds of American imports including pork, soya beans and car parts

China cut tariffs on $75bn (£58bn) of US imports in the latest sign that frosty relations between Washington and Beijing are thawing, giving a boost to the global economic outlook.

The cuts come after the world’s two economic superpowers signed a “phase one” trade agreement last month and will affect goods including important US exports such as pork, soya beans and car parts.

From February, tariffs will be reduced from 10 per cent to 5 per cent on 916 products, with cuts from 5 per cent to 2.5 per cent on hundreds more items.

China’s move is apparently in response to America’s decision last month to reduce tariffs on Chinese goods.

“The next steps depend on the development of the Chinese-US economic and trade situation,” China’s Ministry of Finance said in a statement. “We hope to work with the United States towards the final elimination of all tariff increases.”

The news will be welcomed in markets that have been nervous of the prospect of an escalating tariff war.

Russ Mould, investment director at AJ Bell, said: “While China continues to be stricken by the coronavirus, signs of de-escalation in its trade war with the US could be more relevant to the markets in the long term — particularly if yesterday’s reports of a potential vaccine for the outbreak prove accurate.

“Miners are particularly sensitive to Chinese fortunes thanks to the country’s heavy consumption of commodities and this sector helped lead the FTSE higher.”

There was no indication Beijing altered its own cuts in response to the rising cost of efforts to contain a virus outbreak that have depressed business activity by closing factories, restaurants and shops.

Washington hiked tariffs on Chinese goods in 2018 in response to Beijing’s multibillion-dollar trade surplus and complaints it steals or pressures companies to hand over technology. China retaliated by increasing duties on American goods.

Under the “phase one” deal in October, Washington cancelled planned additional tariff hikes and Beijing committed to buy more US farm exports.

However, most tariff hikes imposed previously by both sides on billions of dollars of each other’s good are still in place.

The US stopped classifying China as a currency manipulator last month as it prepared to officially sign the long-awaited trade deal.

As senior Chinese officials arrived in Washington on Monday to sign the “phase one” agreement, US trade secretary Steve Mnuchin announced the significant concession to Beijing, reversing a decision made on Donald Trump’s orders in August.

The US president has railed against China for years, claiming it artificially lowers the value of the renminbi to make its exports cheaper, harming American industry in the process. Beijing has consistently denied the charge.