Trump agrees to slash China tariffs and scrap new duties - a sign there may be a huge climbdown in the trade war

Associated Press/Charlie Neibergall

• Donald Trump has offered to slash planned tariffs and cut existing duties as part of a preliminary trade deal with China, according to the Wall Street Journal.
• The US president has proposed scrapping duties on $160 billion of Chinese imports set to go live on Sunday, and roughly halving existing tariffs on another $360 billion worth.
• The prospective deal calls for Beijing to buy $50 billion worth of agricultural goods and purchase other US products, the Journal reported.
• The deal, if accepted, would mark a huge de-escalation from Trump in the trade war.
• "The president is upbeat and enthusiastic about his breakthrough," Michael Pillsbury, one of Trump's advisors, told the newspaper.
• "Does it mean we get a comprehensive deal in 2020? Hard to say," says one analyst.
• View Business Insider's homepage for more stories.

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Donald Trump has offered to slash tariffs on $160 billion of Chinese imports that were set to go live on Sunday, and roughly halve existing duties on another $360 billion worth, as part of a preliminary trade deal with China, according to the Wall Street Journal.

The prospective agreement calls for Beijing to buy $50 billion worth of agricultural goods and purchase energy and other American products, Michael Pillsbury, one of the president's advisors, told the Journal. If it doesn't fulfill its commitment, the original tariffs would be reimposed, he said.

The deal, if accepted, would mark a huge de-escalation from Trump in the trade war.

"Does it mean we get a comprehensive deal in 2020? Hard to say," said Neil Wilson, chief markets analyst at Markets.com. While he sees "some doubts creeping in about whether China has accepted this deal," Wilson said, "it does rather look like some of the worst risks and headwinds are fading away."

Trump has slapped a 25% tariff on about $250 billion of Chinese goods, and a 15% duty on another $110 billion, as part of a tit-for-tat trade war with China over the past 20 months. He plans to announce some tariff cuts on Friday as a "goodwill gesture," Pillsbury told the Journal. "The president is upbeat and enthusiastic about his breakthrough."

"Getting VERY close to a BIG DEAL with China. They want it, and so do we!" Trump tweeted on Thursday, sending stocks rallying on the optimism.

However, Beijing's silence so far raises the prospect that the two countries fail to strike a truce before Sunday. China has pledged to retaliate against Trump's planned tariffs by reimposing an additional 25% duty on American vehicles and a 5% duty on US auto parts that it suspended at the start of this year.

China could also struggle to meet Trump's demands. The president's $50 billion ask represents double the value of US farm goods that China bought in 2017, yet Chinese farmers are demanding fewer soybeans as African swine fever has decimated their pig herds, analysts told Reuters. The country would also be hard-pressed to buy enough corn and beef, they said.

"There's just no logistical way that they can double imports in a year," Darin Friedrichs, a senior Asia commodity analyst at INTL FCStone, told the newswire.

The trade talks are complicated by Trump's calls for China to crack down on theft of US intellectual property, open up its financial markets, not manipulate its currency, and reduce state support of domestic companies. The distance between the two sides on those issues mean a comprehensive deal remains a distant prospect.

Members of Trump's own party are worried that cutting tariff rates could weaken the US negotiating position.

"White House should consider the risk that a near-term deal with #China would give away the tariff leverage needed for a broader agreement on the issues that matter the most such as sub­sidies to do­mes­tic firms, forced tech transfers & blocking US firms access to key sectors," Republican Sen. Marco Rubio tweeted on Thursday.

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