AdvertisementChina exportsEconomyChina EconomyCuts to US ‘fentanyl tariffs’ help Chinese exporters close the gap on competition
Analysts said the reduction in US tariffs creates space for Chinese producers to gain on Asian competitors – particularly in low-cost goods
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With the US cutting its tariffs on Chinese imports by 10 per cent – halving a duty initially imposed by Washington over allegations of complicity in the fentanyl trade – analysts said the reduction may further strengthen the competitiveness of Chinese exporters, particularly in mass-produced goods.
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Following a meeting on Thursday between President Xi Jinping and US President Donald Trump in South Korea, the world’s two largest economies reached a consensus on the issue, with the US agreeing to remove half of its 20 per cent in fentanyl-related tariffs on China, effective immediately.
The 90-day pause on tariff increases the two sides agreed to during trade talks in May, extended by another 90 days in August, was also lengthened after this week’s meeting, this time for one year.
That brings overall US tariffs on Chinese goods to 47 per cent, down from the previous 57 per cent, Trump told reporters on Air Force One after the summit. Those figures include duties imposed before Trump’s second term.
“The 10 per cent tariff cut on top of generally higher tariffs on the rest of the world should help improve exporters’ competitiveness to varying extents moving forward,” said Lynn Song, chief Greater China economist with Dutch financial services firm ING.
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“Generally, China has the world’s most complete manufacturing infrastructure and benefits from economies of scale, allowing it to outcompete many other nations.”
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