China has announced it will reduce tariffs on American goods by nearly one-half, in compliance with the first part of its recently inked trade agreement with the United States, while economists in both China and the US wonder how badly the coronavirus outbreak will affect manufacturing and sales in both countries. The first part of the agreement that starts the ball rolling was written last month in order to bring stability to the ongoing trade war between the two giant economies. The threatened tariffs were creating a chaotic Wall Street response and plunging multinational corporations into a frenzy of retrenchment, causing layoffs and reduction of inventory. Unter the first phase, China will increase its spending on US products by more than two-hundred billion dollars over the next 24 months.The new levy system requires China to reduce tariffs on certain products from ten percent to two-point-five percent, starting next week. Because the US has been slow to implement its part of the bargain, says the Chinese Finance Ministry, American products such as automobiles, soybeans and their byproducts, and pharmaceuticals will not be reduced until late this coming September.
At this point, no one knows just how bad the coronavirus’ impact will be on American oil profits. China is the world’s largest consumer of fossil fuels, including oil, but there are indications that with major shipping ports quarantined, oil imports from the US will be held up, if not canceled completely.