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US delays tariff hike on Chinese goods after China announced tariff exemption list

US President Donald Trump wrote in a post on Twitter that the United States had agreed to delay increasing tariffs on $250 billion worth of Chinese imports from Oct. 1 to Oct. 15 “as a gesture of good will.” The tariffs were set to increase to 30% from 25% on the goods.

Trump said he hoped to reach a trade agreement with China following more than a year of tit-for-tat exchanges of tariffs that have roiled global markets.

“I deal with them and I know them and I like them,” he said. “I hope we can do something.”

He also welcomed China’s decision to exempt some American anti-cancer drugs and other products from its tariffs.

China’s decision to exempt some U.S. goods was a “big move” by Beijing and a positive gesture before trade negotiators from both countries meet in Washington, Trump said

China unveiled the list of its first batch of tariff exemptions for 16 types of US goods, including some anti-cancer drugs and lubricants, as well as animal feed ingredients whey and fish meal, according to a statement released by Ministry of Finance on wednesday.

The concessions from the two sides came ahead of a planned meeting by Chinese Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin in early October in Washington.

Deputy trade negotiators are due to meet in mid-September, although exact dates for the meetings have not been released.

“The exemption could be seen as a gesture of sincerity towards the U.S. ahead of negotiations in October but is probably more a means of supporting the economy,” ING’s Greater China economist Iris Pang wrote in a note.

“There are still many uncertainties in the coming trade talks. An exemption list of just 16 items will not change China’s stance,” she said.

Currently, more than 5,000 types of US products that are already subject to China’s additional tariffs. Moreover, US farm goods such as soybeans and pork, are still subject to retaliatory duties, as China has ramped up imports from Brazil and other supplying countries.

Analysts say that with its duties on soybeans and U.S.-made cars, China is taking aim at a key political support base of Trump, mainly the factories and farms across the Midwest and South at a time of receding momentum in the world’s top economy.

China has imposed several rounds of duties on U.S. goods in retaliation against U.S. Section 301 tariffs, beginning last year in July and August with a 25% levy on about $50 billion of U.S. imports.

The items on the two tariff exemption lists – posted on the ministry’s website – will not be subject to additional duties imposed by China on U.S. goods “as countermeasures to U.S. Section 301 measures,” the ministry said in its statement.

The exemption will take effect on Sept. 17 and be valid for a year through to Sept. 16, 2020, the finance ministry said.

The United States had also exempted imports of 110 Chinese products from tariffs in July, including high-value items such as medical equipment and parts.E

The South China Morning Post reported, citing an unidentified source, that China was expected to buy more agricultural products in hopes of a better trade deal with the United States.

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