US President Donald Trump and Chinese Vice Premier Liu He signed the first phase of a trade agreement
The United States and China have agreed to terms of a Phase 1 trade deal on January 15 but Beijing has not reduced or waived tariffs on any commodities or energy further.
A senior Trump administration official confirmed on Wednesday that China will need to issue waivers or adjustments to tariffs to meet its buying commitments.
But so far Beijing has not committed to any new waivers or adjustments.
Late last year, the US reduced some tariffs and Beijing cancelled retaliatory duties that were scheduled to take effect on December 15.
Before the December 15, 2019, deal, US corn, sorghum, wheat, undenatured ethanol and refined copper cathodes had faced an additional tariff of 10 per cent on shipments to China. Propane, cotton, aluminium scrap, copper scrap and rare earth magnets were all set for an additional 5 per cent duty.
Here is a list and timeline showing how China’s tariffs on key US commodities and energy items stand after the Phase 1 accord:
China imposed a 5 per cent tariff on US crude oil shipments from September 1, 2019, the first time US oil had been targeted since the trade war between started more than a year ago. The 5 per cent tariff was not affected by the Phase 1 deal.
China, the world’s biggest crude importer, has cut US shipments from a record high in 2018. Chinese customs data showed imports in the first 11 months of 2019 fell by nearly half year-on-year to 6.35 million tonnes. Full year imports by origin will be available at the end of January.
China already removed an additional 5 per cent tariff on US propane shipments that was set to take effect from December 1, 2019. A 25 per cent duty that China imposed on US propane on August 23, 2018, has remained in place. No new waivers came into effect on January 15.
Chinese firms process US propane into petrochemicals such as propylene. Imports in 2018 were worth an estimated $2 billion. The punitive tariffs nearly killed the business in the first 11 months of 2019, with imports from the US at 2,443 tonnes.
China imposed a 10 per cent punitive tariff on US liquefied natural gas shipments in September 2018, raising it to 25 per cent in June 2019. LNG duties were not affected by the January 15 deal.
Imports of the super-chilled fuel from the US in the first 11 months of 2019 were 258,955 tonnes, much lower than the 2.15 million tonnes imported in the 12 months of 2018, according to Chinese customs. This is a tiny fraction compared to China’s total LNG imports in the January-November 2019 period at 53.85 million tonnes.
Methanol, Ethylene Glycol (MEG)
China imposed tariffs of 25 per cent on US methanol and MEG in June 2019. They were not affected by the January 15 2020 deal.
Imports of US methanol from January to November 2019 dropped to 109 tonnes compared with 75,118 tonnes in full-year 2018. China imported only 69,600 tonnes of US MEG in the first 11 months of 2019, compared with 147,890 tonnes bought through the whole year of 2018.
These were also a tiny part of China’s total January-November 2019 methanol imports at 9.7 million tonnes and MEG imports at 9.03 million tonnes.
No additional duties have been removed as of January 15 but there have been some hefty goodwill waivers on tariffs in recent months.
A 25 per cent tariff on soybeans in July 2018 had halted all buying by commercial buyers, but Chinese crushers went back to the US market following a trade truce in December 2018. An additional 5 per cent duty came into effect in September. The Chinese government has given tariff exemptions to some US soybean imports.
China bought 13.85 million tonnes of soybeans from the US in January-November, down 16.4 per cent from same period in 2018.
American pork faces total import duties of 72 per cent after including the 12 per cent “most-favoured nation” tariff. These duties were not changed in the January 15 deal, but China is expected to boost US meat imports. An outbreak of African swine fever in China has decimated the world’s largest pig herd and sent domestic pork prices soaring to record levels.
Total import tariffs on US frozen pork went down to 68% from January 1, after a cut in tariff rates on frozen pork shipments from all countries. This did not apply to carcasses, chilled pork and offal.
US pork exports to China and Hong Kong were up 49% year-on-year in value at $1.18 billion from January to November 2019.
No changes to duties on scrap metal on January 15. An additional duty of 5% on US aluminium scrap, which would have been effective on December 15, 2019, was cancelled last month. The material was already affected by an initial 25 per cent tariff in April 2018, followed by another 25 per cent in August 2018.
Shipments of aluminium scrap to China were down only 19.7 per cent year-on-year in the first 11 months of 2019, but those of US scrap copper, subject to a 25 per cent tariff since August 2018, crashed by 75.7 per cent over the same period.
China in 2019 raised the prospect of restricting rare earth exports to the US but has not announced any formal curbs or export duties. In the other direction, it has levied 25 per cent tariffs on imports of US rare earth ore and rare earth magnets since June 2019 but cancelled an additional 5 per cent tariff on the latter that was due to take effect in December 2019.
Source: NDTV Profit