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Caixin
Sep 12, 2019 04:26 AM
ECONOMY

China Starts Tariff Exemptions, Keeps Pressure on U.S. Farms

China’s tariff retaliation strategy has focused heavily on curbing trade of agricultural and manufactured goods. Photo: Bloomberg
China’s tariff retaliation strategy has focused heavily on curbing trade of agricultural and manufactured goods. Photo: Bloomberg

(Bloomberg) — China announced a range of U.S. goods to be exempted from 25% extra tariffs put in place last year as the government seeks to ease the impact from the trade war without lifting charges on major agricultural items like soybeans and pork.

Pharmaceuticals and lubricant oil are among exclusions to levies on imports announced by the Ministry of Finance on Wednesday. The exemptions, effective from Sept. 17 to Sept. 16, 2020, will cover 16 categories of products worth about $1.65 billion, according to Bloomberg calculations based on China’s 2018 trade data. Other products on the list include alfalfa, fish meal and pesticides.

The exemptions apply to the round of tariffs China imposed on U.S. goods starting last July in retaliation for higher U.S. levies. The Chinese government began accepting applications for tariff exemptions in May, but this is the first time officials have stated which products will be excluded. The U.S. Trade Representative’s Office has announced six rounds of exclusions for the punitive tariffs on $34 billion in Chinese goods since December.

Further rounds of Chinese exemptions will be announced in due course, the ministry said.

Top Chinese negotiators will travel to Washington for talks in coming weeks, and lower-level officials will also hold discussions this month. Both sides raised tariffs on each others’ goods Sept. 1 in the trade war’s latest escalation, and the U.S. plans to add more tariffs Oct. 1. Both nations will increase some of them again Dec. 15 unless there is a breakthrough.

China’s tariff retaliation strategy has focused heavily on curbing trade of agricultural and manufactured goods produced in U.S. states key for President Donald Trump’s re-election chances. With more U.S. tariff increases on the way, China is unlikely to pare back its response by exempting soybeans and autos.

Application for the second tranche of exclusions started Sept. 2 and will close Oct. 18, China’s finance ministry said earlier on its website. That will be applied to the products subject to additional tariffs on $60 billion of American goods. China said it will open the third tranche of tariffs for exemption requests later, though it hasn’t specified a date.

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