U.S., China back off on tariffs, easing trade tensions

U.S. Treasury Secretary Steven Mnuchin confirmed on Sunday that Washington and Beijing have agreed to back off from imposing tariffs on each other, a day after reaching an accord on slashing the American trade deficit with China.

“We have made very meaningful progress and we agreed on a framework,” Mr. Mnuchin told Fox News Sunday. “So right now we have agreed to put the tariffs on hold while we try to execute the framework.”

No increase in tariffs

China’s Vice Premier Liu He, who led a high-level delegation to the United States this week, meantime confirmed that “the two sides reached a consensus, will not fight a trade war, and will stop increasing tariffs on each other”, Xinhua said.

The apparent détente between the two economic giants follows months of increasing tensions that have set markets on edge over fears of a damaging trade war.

Mr. Mnuchin emphasised on Sunday that the sides had also discussed structural changes by Beijing “to make sure that we have a fair ability to compete” in its vast market.

In the absence of an agreement, U.S. levies on $50 billion of Chinese imports could have taken effect as early as next week. Tariffs on steel and aluminium were put in place in March.

A joint statement issued on Saturday in Washington said Beijing would “significantly” increase its purchases of American goods, but offered few details.

Last year, the U.S. had a $375.2 billion trade deficit with China, and Washington reportedly had demanded the deficit be slashed by at least $200 billion by 2020.

Mr. Mnuchin said there would be “a very big increase” in Chinese purchases of U.S. agricultural supplies — by 35% to 45% this year — as well as a potential doubling of energy purchases. And Mr. Liu said the new cooperation would extend to medical care, high-tech products and finance, according to Xinhua.