China Announces New Batch of Tariff Exemptions for US Imports as Trade Tensions Rise
Amid rising U.S.-China trade tensions, China released a second round of U.S. goods exempt from retaliatory tariffs, according to an unofficial translation of a May 12 Finance Ministry notice. The announcement came one day after a Chinese state news agency said the country is considering invalidating the phase one deal, citing Chinese officials’ frustration with President Donald Trump’s attempt to blame China for the COVID-19 pandemic.
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The list of exemptions -- which contains 79 items, including communication equipment, semiconductor manufacturing equipment, radar equipment and digital cameras -- will take effect May 19 and last through May 18, 2021. The list also includes certain metals, acids, chemicals, “medical disinfectants” and oils. Companies that wish to use the exemptions must apply to China’s customs authority within six months of the publication of the list, China said. China previously announced tariff exemptions for a range of agricultural, chemical goods and metals (see 2002180039, 1912190024 and 1909130013).
The announcement came one day after the Global Times, an English-language Chinese tabloid newspaper under the Communist Party, reported that Chinese officials are growing dissatisfied with the phase one deal and may seek to renegotiate. China is considering “invalidating the trade pact” because of Trump’s pandemic rhetoric that “aims to cover up his mishandling” of the COVID-19 crisis, the report said. The report added that Chinese officials want to “tilt the scales” of a new deal “more to the Chinese side” and believe they can invalidate the deal through a force majeure clause (see 2002140027). “It's in fact in China's interests to terminate the current phase one deal. It is beneficial to us,” a Chinese government trade adviser said, according to the report. “The US now cannot afford to restart the trade war with China if everything goes back to the starting point.”
A Chinese Foreign Ministry spokesperson declined to say whether China wants to renegotiate the deal. “The conclusion of the China-US phase one trade deal serves the interests of China, the US and the world,” the spokesperson said during a May 12 press conference. “The two sides should work together to implement the agreement following the principle of equality and mutual respect.”
Trump said he has “heard” that China wants to renegotiate the deal but added that he is not open to that possibility. “Not even a little bit. No, I’m not interested. We signed the deal,” Trump said May 11. “They’d like to reopen the trade talk to make it a better deal for them …. I’m not interested in that. Let’s see if they live up to the deal that they signed.”