The Chinese government has approved several domestic companies to buy U.S. 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 U.S. cotton without paying the 25% 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.
U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are set to travel to China Monday 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 U.S. 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 U.S. 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 U.S. sorghum in April, 2018, before imports fell to almost nothing this year.
On Thursday, cotton for December delivery rose as much as 0.6% to 64.68 cents a pound on ICE Futures U.S. in New York, the highest since July 9, before trading little changed.