On Friday, the two largest economic powers in the world announced an agreement on a trade agreement, and now China has also formally overridden the threat of retaliatory duties.
The punitive tariffs originally planned for this Sunday have been lifted, the state news agency Xinhua reported. The United States had already declared on Saturday to suspend the new customs round indefinitely.
Beijing has threatened to retaliate if the United States continues to impose tariffs on December 15. However, both sides had agreed on the details of a partial trade agreement on Friday shortly before the cut-off date and thus averted the next round of planned punitive tariffs for the time being. In addition, tariffs that have already been imposed are to be partially reduced.
Read more about the key points in the trade dispute here
China hopes to work with the United States on an equal basis and with mutual respect to address the concerns of both sides, the statement said, which has been released through government websites and state media. The aim was to consolidate the trade relations between the two countries. A second phase of negotiations is now to follow quickly.
We have agreed to a very large Phase One Deal with China. They have agreed to many structural changes and massive purchases of Agricultural Product, Energy, and Manufactured Goods, plus much more. The 25% Tariffs will remain as is, with 7 1/2% put on much of the remainder ....
- Donald J. Trump (@realDonaldTrump) December 13, 2019On Sunday, the US had originally planned to impose an additional 15 percent penalty on consumer goods like laptops and smartphones produced in China, valued at approximately $ 150 billion. This would - after various previous customs rounds - impose additional duties on almost all imports from China, i.e. goods worth around 500 billion US dollars (449.5 billion euros) per year. In return, China wanted to impose additional tariffs of ten and five percent on cars and spare parts from the United States.
German Foreign Trade Association continues to see problems
In their trade conflict, which has been smoldering for around a year and a half, the United States and China are spending billions in taxes, which is not only a burden on the economy of both sides, but is also affecting the global economy and thus also the export-oriented German economy.
The German foreign trade association BGA does not expect the partial settlement to defuse the conflict quickly. "The ailing global economy can use every relaxation signal, even if the communication should only prove to be a truce," said the President of the Federal Association for Wholesale, Foreign Trade, Services (BGA), Holger Bingmann, the German Press Agency.
He emphasized that US President Donald Trump is known for "his volatility". In addition, the agreement "leaves room for interpretation in some places". It is therefore to be feared that "the decoupling of the two major economic blocs, America and China, will continue to advance - with new challenges also for German companies".
At the same time, Bingmann emphasized: "For the internationally positioned German economy, the merging of the two opponents is in any case a conciliatory end to a year characterized by a lot of ups and downs."