Sources: China to ask US to remove tariffs in exchange for agricultural buys in talks Friday – Reuters

Earlier on Friday Reuters released a news report, while relying on anonymous sources aware of the matter, which says Chinese trade officials will request cancellation of some planned and existing US tariffs in return for increased buying of the US agricultural products while negotiating with their US counterparts.

The report mentions that the United States’ (US) Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will talk trade with China’s Vice Premier Liu He on Friday.

Key quotes

“Beijing is expected to ask Washington to drop its plan to impose tariffs on $156 billion worth of Chinese goods, including cell phones, laptop computers and toys, on Dec. 15, two U.S.-based sources told Reuters.”

“Beijing also is likely to seek removal of 15% tariffs imposed on Sept. 1 on about $125 billion of Chinese goods, one of the sources said. Trump imposed the tariffs in August after a failed round of talks, effectively setting up punitive duties on nearly all of the $550 billion in U.S. imports from China.”

“”The Chinese want to get back to tariffs on just the original $250 billion in goods,” the source said.”

“Derek Scissors, a resident scholar and China expert at the American Enterprise Institute in Washington, said the original goal of the early October talks was to finalize a text on intellectual property, agriculture and market access to pave the way for a postponement of the Dec. 15 tariffs.”

“”It’s odd that (the president) was so upbeat with Liu He and yet we still don’t have the Dec. 15 tariffs taken off the table,” Scissors said.”

“U.S. Treasury Secretary Steven Mnuchin said last week said no decisions were made about the Dec. 15 tariffs, but added: “We’ll address that as we continue to have conversations.””

FX implications

Although there was no immediate reaction to the news, this should ideally weigh on the present risk aversion amid a lack of major catalysts.