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China’s Ministry of Finance announced today that China will reduce tariffs by up to fifty percent on certain U.S. imports as the two countries move forward to implement “Phase One” of the trade deal signed on January 15, 2020.  China’s tariff cuts will affect U.S. goods worth approximately $75 billion and will reduce duty rates from 10% to 5% and from 5% to 2.5% depending on the product.  More than 1,700 products will be affected, such as soybeans, automobiles, oil and gas, seafood, and poultry.

The affected U.S.-origin products were originally part of China’s retaliatory tariffs which took effect on September 1, 2019, after the United States implemented the 15% Section 301 List 4A tariffs, which the U.S. has since pledged to reduce to 7.5%. The Finance Ministry indicated that the reasoning behind the decision to reduce tariffs was to “alleviate economic and trade frictions” and to “expand economic and trade cooperation” with the United States.  The proposed tariff cuts are scheduled to take effect on February 14, 2020, to coincide with the implementation of Phase One of the trade agreement.  For additional information on the signing of the U.S.-China Trade Agreement, see our earlier post here.

China’s decision to reduce tariffs has been interpreted by many analysts as a sign of commitment to Phase One of the trade deal with the United States, since it is anticipated that China will be unable to meet the ambitious purchasing targets for U.S. imports that were part of the signed agreement, especially with the current coronavirus epidemic that has significantly slowed China’s economy.  To fulfill the purchasing obligations, U.S. exports to China would need to increase to over $260 billion in 2020 and over $300 billion in 2021.  Such an increase is unprecedented in the history of trade.

Husch Blackwell is monitoring the U.S.-China trade discussions closely and will continue to provide updates as more information becomes available.  If you have any questions regarding the phase one U.S.-China trade deal or other tariff related issues, please contact our International Trade and Supply Chain team.

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Photo of Nithya Nagarajan Nithya Nagarajan

Nithya’s extensive background in U.S. trade issues spans 25 years and includes various roles in a number of federal government agencies, including the Department of Commerce Department of Justice, and the U.S. Court of International Trade. She assists clients with administrative and regulatory…

Nithya’s extensive background in U.S. trade issues spans 25 years and includes various roles in a number of federal government agencies, including the Department of Commerce Department of Justice, and the U.S. Court of International Trade. She assists clients with administrative and regulatory actions before the Department of Commerce, International Trade Commission and U.S. Customs and Border Protection (CBP) and defends clients in appeals before the Court of International Trade, Court of Appeals for the Federal Circuit, NAFTA panels and the World Trade Organization. In addition to her body of U.S. experience, Nithya is also well-versed in international trade issues in China and India.

Photo of Cortney Morgan Cortney Morgan

An experienced attorney in the area of international trade and supply chain issues, Cortney advises foreign and domestic clients on all aspects of international trade regulation, planning and compliance, including import (customs), export controls, economic sanctions, embargoes, international trade agreements and preference programs.

Photo of Camron Greer Camron Greer

A trade analyst, Camron researches transitions in global trade policy and their impact on client business matters. Camron assists clients, attorneys and legal teams when trade, business and the law intersect.

Photo of Turner Kim Turner Kim

A trade analyst, Turner conducts industry research and analyzes trade data to assist attorneys with client proceedings at the U.S. International Trade Commission, U.S. Department of Commerce and U.S. Court of International Trade. He also actively monitors U.S. government and global trade developments…

A trade analyst, Turner conducts industry research and analyzes trade data to assist attorneys with client proceedings at the U.S. International Trade Commission, U.S. Department of Commerce and U.S. Court of International Trade. He also actively monitors U.S. government and global trade developments for issues relating to client’s most critical trade matters.