China cuts tariffs on $75 billion in U.S. imports as coronavirus keeps it in lockdown

China said it would halve tariffs on $75 billion of U.S. goods, pressing forward on the first phase of its trade pact with Washington even as the coronavirus crisis remains a significant hurdle to its economic engine.

The trade agreement signed last month ended the protracted trade conflict that tied up the world's two most powerful economies, imperiled global growth and caused chaos for multinational corporations. The phase one deal required both nations to de-escalate tariffs, and compel China to buy an additional $200 billion in American goods over the next two years.

Certain goods will see their levies reduced from 10% to 5% starting on Feb. 14, China's finance ministry said. Others will have tariffs reduced from 5% to 2.5%. The tariffs on hundreds of U.S. products, including cars, oil and soy beans date back to September, and were placed in response to additional tariffs applied by the U.S. in the fall.

"China hopes that both sides will abide by bilateral agreements and make an effort to implement relevant provisions so that we can boost market confidence, promote bilateral trade relations and global economic growth," China's State Council Tariff Commission said in a statement.

The widely expected tariff reduction comes as China's economy is paralyzed by the coronavirus outbreak, which has infected more than 28,000 in the mainland and killed more than 500. It has also brought China's powerful manufacturing industry to a standstill, as travel restrictions freeze China's workforce and major companies such as Boeing, Apple and Nike have been forced to close factories until at least mid-February. McDonald's, Starbucks, KFC, Levi Strauss, H & M and Samsung have closed stores across China. Casinos in Macao, the world's biggest gambling market, are shutting down for two weeks.

Even if the virus is contained soon, economists are predicting China's growth rate will fall to between 3 and 4% this quarter.

Experts were skeptical about China's ability to deliver the additional $200 billion in American purchases when the pact was signed, and the likelihood seems slimmer given the outbreak. But the pact includes a disaster clause which allows for some leniency in the event of a crisis like the coronavirus. The U.S. is slated to follow suit and cut tariffs on certain Chinese imports from 15% to 7.5%, also on Feb. 14.

China has agreed to buy an additional $76.7 billion in U.S. goods and services in the first year of the deal - a 41% jump compared with the $187.5 billion it spent on American exports in 2017, according to the office of the U.S. trade representative. The Chinese have agreed to dollar targets for services as well as for farm goods, energy products and manufactured goods. New sales for American farmers alone are expected to near $40 billion in the first year, up from $24 billion.

The sign of de-escalation lifted Asian markets, with Hong Kong’s Hang Seng Index closing up 2.5%.