China to buy $50B in US farm goods for tariff relief: US sources

A source said the US would suspend tariffs on $160 billion in Chinese goods and roll back existing tariffs. (File Photo: AP)

Washington has agreed to suspend some tariffs on Chinese goods and cut others in return for Beijing's pledge to hike US farm product purchase in 2020, sources said on Thursday, taking a step to de-escalating the bitter trade war.

Neither Washington nor Beijing have released any official statements, however, raising questions about whether the terms had been agreed by both sides.

A source briefed on the status of bilateral negotiations said the United States would suspend tariffs on $160 billion in Chinese goods expected to go into effect on Sunday and roll back existing tariffs.

In return, Beijing would agree to buy $50 billion in US agricultural goods in 2020, double what it bought in 2017, before the trade conflict started, two US-based sources briefed on the talks said.

The news helped cheer financial markets with the Chinese yuan surging to its highest in more than four months while shares rose in early Asian trade on Friday.

Both countries need to make formal announcements to cancel or postpone the scheduled tit-for-tat tariffs on each other's goods that are scheduled to take effect Sunday, however. Chinese tariffs on US goods would take effect at 0401 GMT, while US tariffs on Chinese goods are scheduled to take effect at 0501 GMT.

China has so far refrained from imposing unilateral tariffs on US imports but has matched any new round of tariffs implemented by Washington with retaliatory measures.

Two people familiar with the negotiations had said earlier on Thursday that US negotiators were offering to cut existing tariffs on Chinese goods by as much as 50% as well as suspend the new tariffs scheduled to go into effect on Sunday in an attempt to secure a "Phase 1" deal first promised in October.

One Beijing-based US business community official told Reuters he viewed what was being described more as a "final offer" that has been approved by Trump but not yet affirmed by Beijing.

Senior Chinese diplomat Wang Yi on Friday sharply criticized Washington for damaging the "hard-won foundation of mutual trust" between the two countries, citing US positions on Hong Kong protests and China's camps for ethnic Uighurs.

"We are willing to resolve contradictions and differences between China and the United States through dialogue and consultation on the basis of equality and mutual respect, but we will never accept the so-called unilateral sanctions and any acts of bullying," he said.

Though Wang did not explicitly comment on trade negotiations, his remarks underscore the increasingly confrontational relationship between the world's top two economies.

The US-China trade war has slowed global growth and dampened profits and investment for companies around the world.

The United States has announced $28 billion in subsidies for American farmers affected by the dispute.

"If signed, this is an encouraging first phase that puts a floor under further deterioration of the bilateral relationship," said US-China Business Council President Craig Allen. "But this is just the beginning. The issues facing the US and China are complex and multi-faceted. They are unlikely to all be resolved quickly."

China bought $24 billion in US farm products in 2017, according to US Department of Agriculture figures.

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Last Update: Wednesday, 20 May 2020 KSA 14:06 - GMT 11:06
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