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March 4, 2019 11:45 AM, EST

Trade Deal That Would Lift US Tariffs on Chinese Goods Said to Be Near

Trade Leaders from China and the US during trade talks. (Al Drago/Bloomberg News)

The United States and China are close to a trade deal that could lift most or all U.S. tariffs as long as Beijing follows through on pledges ranging from better protecting intellectual-property rights to buying a significant amount of American products, two people familiar with the discussions said.

Chinese officials made clear in a series of negotiations with the United States in recent weeks that removing levies on $200 billion of Chinese goods quickly was necessary to finalize any deal, said the sources, who weren’t authorized to talk publicly about the deliberations. That’s the amount the Trump administration imposed after China retaliated against the United State’s first salvo of $50 billion in tariffs that kicked off the eight-month trade war.

One of the remaining sticking points is whether the tariffs would be lifted immediately or over a period of time to allow the United States to monitor whether China is meeting its obligations, the people said. The United States wants to continue to wield the threat of tariffs as leverage to ensure China won’t renege on the deal, and only lift the duties fully when Beijing implemented all parts of the agreement.

As part of the ongoing talks, the United States asked the Chinese not to retaliate or bring World Trade Organization cases in response to U.S. tariffs that could be imposed to enforce the deal, according to a person familiar with the negotiations.

Stocks in Europe and Asia advanced on optimism about a deal, with the Stoxx Europe 600 Index rising 0.4%. The offshore yuan gained 0.2%.

Trade

Qilai Shen/Bloomberg News

Dates for a summit between President Donald Trump and counterpart Xi Jinping have yet to be agreed, according to officials from both countries who declined to be named. The Wall Street Journal, which reported earlier that a U.S.-China trade deal was close to being finalized, reported the summit could happen around March 27.

Plans for a signing ceremony have been complicated by Xi’s need to lead China’s annual National People’s Congress and to make other foreign trips.

United States and Chinese officials “have conducted fruitful and intensive consultations and made important progress on many issues of common concern,” Zhang Yesui, a spokesman for the National People’s Congress, the annual session of China’s Legislature, told reporters in Beijing on March 4. “We hope that the two sides will continue to hold consultations and reach a mutually beneficial and win-win agreement,” he added.

China is offering to lower tariffs on U.S. farm, chemical, auto and other products, the Journal said, citing people familiar with the situation. Specifically, China would buy $18 billion in natural gas from Houston-based Cheniere Energy Inc., one of the people familiar with the matter said.

As part of a deal, China is pledging to speed up the timetable for removing foreign-ownership limitations on auto ventures, and to reduce tariffs on imported vehicles to below the current rate of 15%, the newspaper reported.

A senior administration official cautioned March 3 that a decision had not yet been made over lifting the U.S tariffs. The official also said a debate was continuing inside the administration with Trump unlikely to make a decision before a deal was closer to being done, likening the situation to the debate over what to do with U.S. sanctions in the lead-up to last week’s summit with North Korea’s Kim Jong Un.

Trade

Luke Sharrett/Bloomberg News

Asked during a congressional hearing last week whether a deal would see a lifting of tariffs, U.S. Trade Representative Robert Lighthizer, now leading the talks with Beijing, would say only that was China’s desire.

Bloomberg reported March 1 that the United States and China were close to finalizing an agreement.

Trump and members of his economic team have has sounded optimistic about the chances for sealing a deal. And U.S. stocks have rebounded from their worst December since the Great Depression on signs the world’s two largest economies are resolving their trade differences without further escalation.

Citing progress toward a deal, Trump last week delayed a planned increase of tariffs on Chinese imports to 25%, from 10%, that was scheduled to take effect March 1.

On March 1, Trump said he demanded Beijing, in response to his tariff delay, immediately remove all duties on U.S. agriculture products.

The Chinese have offered to ramp up purchases of American goods by $1.2 trillion over six years, according to a person familiar with the matter. It’s still unclear how Beijing would follow through on those purchases if retaliatory tariffs remained in place and other trading barriers aren’t removed, the person added. China bought $130 billion in U.S. goods in 2017, according to U.S. figures.

After several rounds of face-to-face meetings between U.S. and Chinese officials since last year, the sides now are in regular contact via phone and video conference to produce details of a deal.