US officials are under growing pressure from American companies to remove punitive tariffs imposed on Chinese products as part of an effort to cope with the potentially grave impact of the new virus on the US economy, and the epidemic could offer a turning point for the bilateral relationship, Chinese analysts said on Wednesday.
Pointing to US stock market volatility after the US Federal Reserve made a rare 50-basis-point interest rate cut, analysts argued that stopping the trade war with China will be more effective for both countries to cope with the economic fallout of the new virus outbreak.
In a sign of rising pressure on the US administration, US Treasury Secretary Steven Mnuchin was asked whether the US was considering lowering tariffs on goods from China in response to the new virus attack in the US at a hearing in the US Congress on Tuesday.
"We're not considering that at the moment, but as this progresses ... we'll look at all the options that we think are important to help particularly SMEs and particular areas of the economy that are impacted by this," said Mnuchin, according to Reuters.
The comments came as US stocks have seen massive losses over the past week as investors were spooked by the rapidly spreading virus in the US that could affect businesses and dampen economic growth.
The volatility prompted the Fed to cut the interest rate by 50 basis points but the move did not calm the markets, as all three major indexes tanked at least 2.8 percent on Tuesday.
Against such a background, "the US government obviously is facing higher pressure to reduce tariffs on Chinese products," Song Guoyou, director of Fudan University's Center for Economic Diplomacy, told the Global Times on Wednesday, noting that if an epidemic develops in the US, the US will feel more pressure to suspend tariffs imposed on Chinese imports.
The US had reported more than 120 confirmed new virus cases now but the number is expected to rise substantially as US officials are ready to test as many as one million people for the new virus by the end of the week. The economic impact of the epidemic both in the US and around the world on US businesses, particularly small and medium-sized enterprises, is expected to further deepen.
"A very interesting question to watch: Will the war on new virus be a turning point for the China-US trade war?" Mei Xinyu, a research fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times on Wednesday. "If the US wants to help its businesses and consumers, removing tariffs and coming to a reasonable agreement with China is the best option."
Despite a phase one deal signed in January, the US still collects tariffs of 7.5 percent and 25 percent on a total of $370 billion worth of Chinese products, which have added extra costs for US businesses and consumers.
"As businesses are already facing supply chain disruption due to the epidemic, a wise move for the US is to listen to requests from businesses to suspend tariffs, which are themselves a burden for the companies," said Li Yong, a deputy chairman of the expert committee of the China Association of International Trade. "This is a reasonable and rational decision. It's not about the trade war. It's about coping with the viral outbreak."