China announced Wednesday it will exempt American industrial grease and some other imports from tariff hikes in a trade war with Washington but kept in place higher duties on soybeans and other major U.S. exports ahead of negotiations next month.
The move adds to suggestions both governments might be settling in for extended conflict by fine-tuning import controls and trying to find alternative export markets and suppliers.
Sixteen products including lubricants, fish meal for animal feed and some chemicals will be exempt from penalties of up to 25% imposed in response to President Donald Trump’s tariff hikes on Chinese imports, the Ministry of Finance said. Punitive duties on soybeans, the biggest U.S. export to China, and thousands of other imports were left unchanged.
Trade talks in Washington
Negotiators are preparing for talks in Washington aimed at ending the tariff war over trade and technology that threatens global economic growth. The plan for talks has helped to calm jittery financial markets, but economists warn there has been no sign of progress and neither government has offered concessions aimed at breaking a deadlock.
Imports on Wednesday’s list are raw materials for farming or manufacturing, suggesting Chinese leaders want to limit damage to their own industries at a time of slowing economic growth.
Beijing’s earlier tariff hikes avoided processor chips and other U.S. technology required by Chinese industry.
Chinese leaders are resisting U.S. pressure to roll back plans for government-led creation of global competitors in robotics and other industries.
Washington, Europe, Japan and other trading partners say those plans violate China’s market-opening commitments and are based on stealing or pressuring companies to hand over technology.
Tariffs batter farmers, factories
Washington and Beijing have raised tariffs on billions of dollars of each other’s imports. That has battered farmers and manufacturers on both sides and fueled fears a global economy that was showing signs of a slowdown might tip into recession.
Trump has imposed or announced penalties on about $550 billion of Chinese imports, or almost everything the United States buys from China. Tariffs of 25% imposed previously on $250 billion of Chinese goods are to rise to 30% Oct. 1.
China has raised duties on about $120 billion of U.S. imports, economists estimate. Some have been hit with increases more than once, while about $50 billion of U.S. goods is unaffected, possibly to avoid disrupting Chinese industries.
In their latest escalation, Washington imposed 15% tariffs on $112 billion of Chinese imports Sept. 1 and is planning to hit another $160 billion Dec. 15. Beijing responded by imposing duties of 10% and 5% on a range of American imports.
Products covered by Wednesday’s exemptions include lubricants, insecticides and whey and fish meal for animal feed.
China feels trade heat
Chinese imports of U.S. goods tumbled 22.5% in August from a year earlier and exports to the United States, China’s biggest foreign market, fell 16%.
Beijing has agreed to narrow its politically sensitive trade surplus with the United States but is reluctant to give up development strategies it sees as a path to prosperity and global influence.
Talks broke down in May over how to enforce any agreement.
China insists Trump’s punitive tariffs must be lifted once a deal takes effect. Washington says at least some must stay to make sure Beijing carries out any promises.
Some analysts suggest Beijing might be holding out in hopes Trump will feel pressure to make a more favorable deal as his campaign for the 2020 presidential election picks up. Trump has warned China will face a tougher U.S. negotiating stance if he is re-elected.