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China takes a backward step as it braces for the impact of Trump's trade war

Will Martin
China takes a backward step as it braces for the impact of Trump's trade war
  • China says it would cut import tariffs on numerous non-US goods, a major backward step in its trade war with the US.
  • The move is most likely designed to protect Chinese consumers against rising costs associated with the trade war.
  • The cuts in tariffs are expected to save Chinese consumers and businesses something in the order of 60 billion yuan ($US8.7 billion), according to Reuters.

China on Wednesday took a major backward step in its trade war with the US, announcing that it would cut import tariffs on numerous non-American goods.

The cuts, most likely designed to protect Chinese consumers against the escalating conflict with the Trump administration, goes into effect on November 1.

Products affected by the cuts include electrical equipment, machinery, and textiles, the Chinese state cabinet said.

The cuts in tariffs are expected to save Chinese consumers and businesses something in the order of 60 billion yuan ($US8.7 billion), according to Reuters, which cites Chinese state radio.

One consequence of the cuts is that China's overall tariff level will be reduced to 7.5% at the end of 2018, from 9.8% last year, the state cabinet said, according to Reuters.

As well as protecting Chinese consumers, the move is also likely to act as an incentive to stop citizens from buying US goods. By cutting tariff levels on non-US goods while increasing them on American imports, China is effectively steering its consumers away from such items, something that could hurt the US.

Earlier this year, the Chinese government cut its auto import tariff to 15% from 25%, but just weeks later increased its tariff on US auto imports to 40%. The move boosted imports of Japanese and European autos.

The announcement comes just a week after the Trump administration placed fresh tariffs on $US200 billion of Chinese imports, before Beijing retaliated by hitting the US with tariffs on $US60 billion of its goods. Both sides have said they are willing to impose further tariffs, with President Donald Trump frequently indicating a willingness to tax all $US505 billion of Chinese goods flowing into the US.

Alongside increasing tariffs, communications between the two sides have become more and more strained in recent weeks.China called off planned talks between mid-level officials over the weekend, and reengagement appears to be unlikely until at least after the US midterm elections in November.