COVID-19

As the coronavirus epidemic grows, China prepares to cut tariffs

Kimberly Adams Feb 6, 2020
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A woman wears a protective mask as she waits on an empty subway platform during the evening rush hour on Feb. 3 in Beijing. Kevin Frayer/Getty Images
COVID-19

As the coronavirus epidemic grows, China prepares to cut tariffs

Kimberly Adams Feb 6, 2020
A woman wears a protective mask as she waits on an empty subway platform during the evening rush hour on Feb. 3 in Beijing. Kevin Frayer/Getty Images
HTML EMBED:
COPY

China took steps Thursday to further deescalate the trade war. Its government announced it would reduce tariffs on more than 17,000 U.S. products as part of the phase one trade deal.

These tariff cuts will kick in Friday, the same day American tariffs on some Chinese products are set to be reduced. This is an incremental step in the implementation of the phase one deal but context is key: This move comes as China grapples with the continuing fallout from coronavirus.

The human cost of the outbreak is growing; hundreds of people have died from the virus and and tens of thousands are sick.

Wendong Zhang, an economics professor at Iowa State University, said the risk that China’s economy might not grow as fast this year has markets questioning whether the virus will specifically impact China’s ability to implement the U.S.-China phase one deal. He said that’s part of the reason China is reducing tariffs.

“This step brings in some certainty and shows China’s willingness to continue to carry out the promises in the phase one deal,” Zhang said.

The White House has expressed concern China might need to delay some parts of the deal, like promised purchases of U.S. agricultural products.

Joshua Meltzer, a senior fellow at the Brookings Institution, said those purchases had people scratching their heads even before the virus outbreak.

“Effectively, the deal requires China to double purchases, and it’s not clear how this is going to be done,” Meltzer said.

Not just because there may not be enough market demand in China but also because U.S. farmers need to ramp up production.

“That depends on not just the investments they make and in their seed and fertilizer and all those things, but the vagaries of the weather,” said Matt Slaughter, dean of the Tuck School of Business at Dartmouth.

Slaughter said whether China can stay on track with the phase one deal objectives will depend on the ultimate human and economic cost of the coronavirus.

COVID-19 Economy FAQs

Pfizer said early data show its coronavirus vaccine is effective. So what’s next?

In the last few months, Pfizer and its partner BioNTech have shared other details of the process including trial blueprints, the breakdown of the subjects and ethnicities and whether they’re taking money from the government. They’re being especially transparent in order to try to temper public skepticism about this vaccine process. The next big test, said Jennifer Miller at the Yale School of Medicine, comes when drug companies release their data, “so that other scientists who the public trust can go in, replicate findings, and communicate them to the public. And hopefully build appropriate trust in a vaccine.”

How is President-elect Joe Biden planning to address the COVID-19 pandemic and the economic turmoil it’s created?

On Nov. 9, President-Elect Joe Biden announced three co-chairs of his new COVID-19 task force. But what kind of effect might this task force have during this transition time, before Biden takes office? “The transition team can do a lot to amplify and reinforce the messages of scientists and public health experts,” said Dr. Kelly Moore, associate director for the Immunization Action Coalition. Moore said Biden’s COVID task force can also “start talking to state leaders and other experts about exactly what they need to equip them to roll out the vaccines effectively.”

What does slower retail sales growth in October mean for the economy?

It is a truism that we repeat time and again at Marketplace: As goes the U.S. consumer, so goes the U.S. economy. And recently, we’ve been seeing plenty of signs of weakness in the consumer economy. Retail sales were up three-tenths of a percent in October, but the gain was weaker than expected and much weaker than September’s. John Leer, an economist at Morning Consult, said a lack of new fiscal stimulus from Congress is dampening consumers’ appetite to spend. So is the pandemic.

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