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Report: US considering rescinding tariffs on China to reach trade deal

The Trump administration may be willing to dial back or even completely remove its heavy tariffs on China as the two countries work toward a trade deal ahead of a looming March 1 deadline, The Wall Street Journal reported Jan. 17.

U.S. Treasury Secretary Steven Mnuchin has proposed lifting some or all of the tariffs on $250 billion of Chinese imports that have been imposed by the Trump administration, according to the Journal, citing people close to the negotiations. The goal is to advance trade talks and incentivize China to make concessions in a trade war that has rattled markets and begun to harm American companies, according to the report.

However, U.S. Trade Representative Robert Lighthizer, who is leading the talks with China, is said to have pushed back against a tariff reduction, claiming that such a move could be seen as weakness on the part of American negotiators, according to the report. Mnuchin is still contributing to the administration's trade strategy and has engaged in talks with China, though the U.S. has taken a largely hard-line approach up until this point.

A Treasury spokesperson working with the trade team said officials have not made any recommendations to date.

"Neither Secretary Mnuchin nor Ambassador Lighthizer have made any recommendations to anyone with respect to tariffs or other parts of the negotiation with China," the spokesperson said in an emailed statement to S&P Global Market Intelligence. "This is an ongoing process with the Chinese that is nowhere near completion."

The Office of the U.S. Trade Representative did not immediately return a request for comment.

The U.S. and China are currently in a 90-day detente that began Dec. 1 after U.S. President Donald Trump and Chinese President Xi Jinping agreed not to impose further tariffs on one another's goods as they seek a resolution to the ongoing trade spat.

The U.S. imposed three separate tranches of tariffs on imported Chinese goods in 2018: a 25% tariff on $34 billion of Chinese goods that include automobiles, industrial parts and construction parts in July; a 25% tariff on $16 billion of Chinese imports that include semiconductors, plastics and processors in August; and a 10% tariff on $200 billion of Chinese imports that include mattresses, vacuums, baseball gloves, furniture, and appliances.

If a deal is not reached by March 1, the U.S. is poised to raise the 10% tariff on $200 billion of Chinese goods to 25% on March 2. Trump has also said he will forge ahead with a separate tariff on the remaining $267 billion of Chinese imports.

However, Trump has publicly stated his optimism for a deal, and China has made several goodwill gestures in recent weeks, including agreeing to buy U.S. rice for the first time.

The tariffs and greater trade uncertainty have hamstrung American companies that source heavily from China, leading to higher production and consumer prices and limiting investment and expansion. Beijing has also imposed its own retaliatory tariffs, which have hurt the American agriculture sector, including soybean exports.