WASHINGTON/BEIJING (Reuters) – Washington has set its terms for a trade deal with China, offering to suspend some tariffs on Chinese goods and cut others in exchange for Beijing buying more American farm goods, U.S. sources said on Thursday.
Beijing’s silence, however, fueled questions over whether the two sides can come to a truce in their bitter trade war before a new round of tit-for-tat tariffs takes effect on Sunday.
A source briefed on the status of bilateral negotiations said the United States would suspend tariffs on $160 billion in Chinese goods expected to go into effect on Sunday and roll back existing tariffs.
In return, Beijing would agree to buy $50 billion in U.S. agricultural goods in 2020, double what it bought in 2017, before the trade conflict started, two U.S.-based sources briefed on the talks said.
China’s yuan jumped to a 4-1/2 month high against the U.S. dollar and Chinese shares rallied on Friday on hopes the two sides will avoid further escalation of the trade war. Neither Washington nor Beijing had made official statements, however, raising questions about whether the terms had been agreed by both sides.
New Chinese tariffs on U.S. goods are due to take effect at 0401 GMT Sunday and new U.S. tariffs on Chinese goods will apply at 0501 GMT. Both would need to make formal announcements to postpone or cancel these tariffs.
Two people familiar with the negotiations had said earlier on Thursday that Washington offered to cut existing tariffs on Chinese goods by as much as 50% and suspend the new tariffs scheduled for Sunday in order to secure a “Phase 1” deal first promised in October.
One of these people told Reuters that U.S. President Donald Trump and his top advisers agreed on the terms for a proposal, possibly a final offer, and were now waiting for Beijing to sign off in writing.
A Beijing-based U.S. business community official also told Reuters he viewed what was being described more as a “final offer” that has been approved by Trump but not yet affirmed by Beijing.
Chinese foreign ministry spokeswoman Hua Chunying, asked about the status of the trade talks during a daily briefing on Friday, reiterated that Beijing is committed to resolving outstanding issues but that a deal must be mutually beneficial.
She did not comment on whether the two sides had reached an agreement or the terms of any deal with the United States.
Some analysts continued to question whether China can deliver such a dramatic increase in agricultural purchases.
For instance, demand for soybeans – a key U.S. product used for animal feed – is down sharply after the African Swine Fever outbreak devastated China’s pig herd. This decline also makes a big increase in corn purchases hard to implement, they said.
It will also be difficult to significantly ramp up purchases of other U.S. farm products such as beef, they said.
“There’s just no logistical way that they can double imports in a year,” said Darin Friedrichs, senior Asia commodity analyst at INTL FCStone.
In a sign of strained ties, senior Chinese diplomat Wang Yi blasted Washington for damaging relations by criticizing Beijing over issues such as Hong Kong and the treatment of Muslim Uighurs, although he did not specifically mention the trade war.
“We will never accept the so-called unilateral sanctions and any acts of bullying,” he during an event on Friday morning.
In the absence of a deal that at the least declares a truce to the 17-month trade war, U.S. tariffs on Chinese imports including products such as video game consoles and computer monitors begin Sunday. China’s retaliatory tariffs, targeting goods ranging from corn and wheat to small aircraft and rare earth magnets, will also start.
Beijing is also scheduled to begin reapplying on Dec. 15 an additional 25% tariff on U.S.-made vehicles and 5% tariffs on auto parts that had been suspended at the beginning of 2019.
Chinese officials and trade experts have warned that another exchange of tariffs could torpedo the trade negotiations and further escalate the dispute. Some experts say it’s possible that talks may be suspended altogether until after the U.S. presidential election in November 2020.
Reporting by Jeff Mason, Andrea Shalal, David Lawder in Washington, Cate Cadell, Dominique Patton and Tony Munroe in Beijing, Winni Zhou and Andrew Galbraith in Shanghai; Writing by Heather Timmons and Se Young Lee; Editing by Matthew Lewis, Sonya Hepinstall, Sam Holmes, Lincoln Feast and Gerry Doyle.