China Tax Cuts Could Offset Trade War Harm

Tax cuts in China could offset trade war harm and support economic growth.  A China International Capital Corporation economist told CNBC tax cuts in China could provide growth needed to offset economic losses from the trade war.  However, the economist says more tariffs from the U.S. poses risks to the growth potential.

President Trump still holds a proposed round of additional tariffs against China, if trade talks don't make progress.  China launched a personal income tax cut in March, which led to an increase in retail sales, up 9.8% from a year ago.  U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will travel to China next week to continue negotiations with China.

The White House says the discussion will “cover a range of issues,” including agriculture. The negotiations stalled in May when China backtracked on previously agreed-to provisions of a potential agreement. Retaliation against U.S. tariffs by China have focused on U.S. agriculture, slowing China purchases of U.S. ag products.

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