China exempts some US goods from tariffs in lead-up to talks

Workers make desks for export to the US at a factory in Nantong in China’s Jiangsu province. The world’s two largest economies have slapped tit-for-tat tariffs on hundreds of billions of dollars worth of goods. (AFP)
Updated 11 September 2019

China exempts some US goods from tariffs in lead-up to talks

  • Chinese trade deputies expected to meet with their US counterparts in mid-September in Washington

BEIJING: China announced exemptions for 16 types of US products from additional retaliatory duties, in a move that comes as trade negotiators from the two countries prepare to meet later this month to try to de-escalate their protracted tariff row.

The exemptions will apply to US goods including some anti-cancer drugs and lubricants, as well as animal feed such as whey and fish meal, the Ministry of Finance said in a statement on Wednesday.

In all, the world’s two largest economies have slapped tit-for-tat tariffs on hundreds of billions of dollars worth of goods in a bitter trade war that has dragged on for well over a year and hurt business investment, profits and global growth.

The items on the two tariff exemption lists — posted on the ministry’s website — will not be subject to additional duties imposed by China on US goods “as countermeasures to US Section 301 measures,” the ministry said in its statement.

The exemption will take effect on Sept. 17 and be valid for a year through to Sept. 16, 2020, it said.

However, the exempted list includes only a small quantity of items in comparison to more
than 5,000 types of US products that are already subject to China’s additional tariffs. Moreover, major US imports, such as soybean and corn, are still subject to hefty additional duties.

Wednesday’s announcement comes before Chinese trade deputies are expected to meet with their US counterparts in mid-September in Washington. That will be followed by minister-level meetings in early October in the US capital, involving Chinese Vice Premier Liu He, US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.

The South China Morning Post reported, citing an unidentified source, that China was expected to buy more agricultural products in hopes of a better trade deal with the US.

But senior White House adviser Peter Navarro tamped down expectations for the next rounds of trade talks, urging investors, businesses and the public to be patient about resolving trade dispute.

Beijing has previously said it would work on exempting some US products from tariffs if they are not easily substituted from elsewhere. 

The US is by far China’s largest supplier of whey, which is an important ingredient in piglet feed and difficult to source in large volumes from elsewhere.

The Finance Ministry said it will consider more products to be exempted and will make further announcements “at appropriate times.”

Earlier on Wednesday, a survey by a prominent American
business association showed the trade war is souring the profit and investment outlook for US companies operating in the world’s second-biggest economy. 


Oil prices surge after attacks hit Saudi output

Updated 16 September 2019

Oil prices surge after attacks hit Saudi output

  • The Houthi attacks hit two Aramco sites and effectively shut down six percent of the global oil supply
  • President Donald Trump said Sunday the US was ‘locked and loaded’ to respond to the attacks

HONG KONG: Oil prices saw a record surge Monday after attacks on two Saudi facilities slashed output in the world’s top producer by half, fueling fresh geopolitical fears as Donald Trump blamed Iran and raised the possibility of a military strike on the country.
Brent futures surged $12 in the first few minutes of business — the most in dollar terms since they were launched in 1988 and representing a jump of nearly 20 percent — while WTI jumped more than $8, or 15 percent.
Both contracts pared the gains but were both still more than 10 percent up.
The attack by Tehran-backed Houthi militia in neighboring Yemen, where a Saudi-led coalition is bogged down in a five-year war, hit two sites owned by state-run giant Aramco and effectively shut down six percent of the global oil supply.
Trump said Sunday the US was “locked and loaded” to respond to the attack, while Secretary of State Mike Pompeo said: “The United States will work with our partners and allies to ensure that energy markets remain well supplied and Iran is held accountable for its aggression.”
Tehran denies the accusations but the news revived fears of a conflict in the tinderbox Middle East after a series of attacks on oil tankers earlier this year that were also blamed on Iran.
“Tensions in the Middle East are rising quickly, meaning this story will continue to reverberate this week even after the knee-jerk panic in oil markets this morning,” said Jeffrey Halley, senior market analyst at OANDA.
Trump authorized the release of US supplies from its Strategic Petroleum Reserve, while Aramco said more than half of the five million barrels of production lost will be restored by tomorrow.
But the strikes raise concerns about the security of supplies from the world’s biggest producer.
Oil prices had dropped last week after news that Trump had fired his anti-Iran hawkish national security adviser John Bolton, which was seen as paving the way for an easing of tensions in the region.
“One thing we can say with confidence is that if part of the reason for last week’s fall in oil and improvement in geopolitical risk sentiment was the news of John Bolton’s sacking ... and thoughts this was a precursor to some form of rapprochement between Trump and Iran, then it is no longer valid,” said Ray Attrill at National Australia Bank.