HONG KONG — China on Thursday said it would reduce tariffs on $75 billion worth of American-made goods, a step that signals its intention to hold up its end of a trade truce with President Donald Trump despite the coronavirus crisis unfolding largely within its borders.
That truce most likely will not last long, however, if China does not carry through with the part of the deal Trump prizes most: a promise to buy about $200 billion in goods from the United States over the next two years.
The move announced Thursday was widely expected as both sides back down from an increasingly punishing trade war. In January the two governments reached an interim trade pact intended to forestall more tariff increases. The deal represented a freeze on the trade war rather than an end, and the countries have pledged to continue talks.
The United States agreed to reduce tariffs on $120 billion worth of Chinese-made goods as part of that deal, and Thursday, China reciprocated. China’s Ministry of Finance said that it would essentially halve tariffs it placed in September on American cars, crude oil, soybeans and other goods. The tariff cuts would go into effect on Feb. 14.
Chinese officials on Thursday said that they still hope to eventually eliminate tariffs enacted by both sides. The trade truce left in place most of the new and increased tariffs on $360 billion in Chinese-made goods that Trump began enacting in 2018, setting off the trade war between the two economic heavyweights.
“The next step of the adjustment depends mainly on the development and changes of the Sino-US economic and trade situation,” the ministry said in a statement. “We hope to work with the United States toward the ultimate elimination of all imposed tariffs.”
Before that next step can happen, China may need to prove to the United States that it plans to buy that $200 billion in goods that it promised in January. That could be difficult for Beijing, which is grappling with one of its biggest challenges of the modern era.
Chinese officials have put major portions of the country on lockdown as they try to contain a coronavirus that has killed hundreds of people and sickened thousands more. Factories and companies across the country have temporarily closed their operations. Major airlines have canceled flights to China.
The outbreak and containment threaten to reduce China’s economic growth, which could blunt its appetite for American-made goods, meat and crops. They also present logistical problems. Many government offices that do not supply essential or emergency services have been closed, while travel within the country has become difficult as authorities set up checkpoints and limit travel.
In a research note Wednesday, Fitch Ratings, the ratings firm, said that the country’s economic growth in the January-to-March period could fall by nearly half compared with a year earlier, to 3%, if the epidemic is not contained before spring.
The price of oil has fallen in anticipation of lower Chinese demand. China has signaled that it would allow firms to claim force majeure — essentially, recognition that a company cannot meet its obligations because of circumstances beyond its control — for reasons related to the outbreak.
Still, the coronavirus gives China new reasons to hold up its end of the bargain. The trade pact commits China to purchasing $32 billion in American agricultural products over two years. That food could come in handy: Chinese officials have rushed to ensure adequate food supplies and keep grocery bills low despite the containment efforts.