A shopper walks past an adidas store at an outlet mall in Los Angeles on Tuesday. More than 170 shoe companies and retailers including adidas, Nike, Skechers and Under Armour have warned US President Donald Trump about the “catastrophic” effects of a trade war with China. Photo: AFP

 
Chinese and US trade negotiators have agreed to roll back punitive tariffs on each other's goods in phases based on different stages of a trade deal, China's Ministry of Commerce (MOFCOM) said, further lifting market expectations for an agreement.

However, even as a broad consensus may have been reached on tariffs, the two countries appear to be stuck in negotiations over how far the tariffs should be lifted by each side for the phase-one agreement, analysts said.

Over the past two weeks, the two sides held "serious and constructive" discussions over each other's core concerns and "agreed to remove additional tariffs in phases in line with progresses in the [trade] agreement," Gao Feng, a spokesperson for the MOFCOM, said on Thursday.

US officials have been sending signals that Washington may lift certain tariffs on Chinese goods as part of the phase-one deal, although some wanted to only cancel tariffs planned for mid-December and keep existing tariffs intact.

However, at the press briefing, Gao made it clear that China would not accept a deal that allows the US to keep existing tariffs on Chinese goods, as he repeatedly stressed lifting tariffs as a precondition.

"China's stance on tariffs has been consistent and clear: The trade war started with imposing additional tariffs and should end with cancelling of additional tariffs," he said, suggesting that the scale of removals in the first phase should be based on the actual contents of the phase-one deal.

Analysts said that Gao's comment may suggest that lifting of tariffs remains a sticking point in the negotiations for the phase-one deal, which was widely expected in mid-November before Chile called off the APEC summit, where the deal was said to be signed.

"The US seems to be only interested in making demands but unwilling to match China in compromises. That creates trouble for moving forward in the negotiations," Sang Baichuan, director of the Institute of International Business at the University of International Business and Economics, said. "If the US only wants to take and not give, it is risking the trade deal for some last-minute gains."

Gao stressed that removal of tariffs should be "simultaneous and proportionate." 

Gao Lingyun, an expert at the Chinese Academy of Social Sciences, said that proportionate could mean that if the first phase trade deal covers 60 percent of the total deal, as US President Donald Trump has suggested, 60 percent of the existing tariffs should be removed. 

"That is understandably the ultimate goal for China," said Gao Lingyun. "There would be no point for China to take a deal that allows the US to keep all existing deals."

Still, he remained upbeat about a potential deal in the near future, saying that an announcement could be made before December 15, even if the two sides were unable to sign one before then, to avoid technical problems with the new round of tariffs the US has threatened to impose on that date.