BEIJING (BLOOMBERG) - The Chinese government has approved several domestic companies to buy US cotton, corn, sorghum and pork without being subject to hefty retaliatory tariffs, according to people familiar with the situation.
Some textile mills have been given permission to purchase a total 50,000 tons of US cotton without paying the 25 per cent retaliatory duty, the people said.
A number of companies will also be exempt from the tariffs on American pork, corn, and sorghum, the people said, without specifying the volume.
The move follows the approval of some 3 million tons of US soybeans for purchase with tariff waivers, according to people familiar with the situation earlier this week.
There could be a second round of exemptions depending on how the trade talks progress, they said. China's commerce ministry didn't respond to a fax seeking comment.
US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are set to travel to China on Monday (July 29) for the first high-level, face-to-face trade negotiations between the world's two biggest economies since talks broke down in May.
In a press conference on Thursday in Beijing, China's commerce ministry spokesman said companies are willing to buy US farm products in line with domestic demand and their purchases are made on their own decisions. There is no direct connection between purchases and the resumption of trade talks, ministry spokesman Gao Feng said.
Even with the tariffs in place, the US sold about 64,000 tons of cotton in May, according to Chinese customs data. Meanwhile, American exports of corn, sorghum and pork have slumped since the beginning of the trade war. China imported more than 620,000 tons of US sorghum in April, 2018, before imports fell to almost nothing this year.
On Thursday, cotton for December delivery rose as much as 0.6 per cent to 64.68 cents a pound on ICE Futures US in New York, the highest since July 9, before trading little changed.