China says tariffs will come down if trade deal reached with U.S.

Beijing and Washington have agreed to reduce some punitive tariffs on each other's goods as talks on ending their trade war progress, a Chinese spokesman said Thursday, removing a possible stumbling block to a settlement.

The agreement came during talks aimed at working out details of a "Phase 1" deal announced Oct. 12. Financial markets were rattled by reports China was pushing for tariffs to be lifted, which raised the possibility of a breakdown in talks.

Negotiators agreed to a "phased cancellation" of tariff hikes if talks progress, said a Commerce Ministry spokesman, Gao Feng.

"If the two sides achieve a 'Phase 1' agreement, then based on the content of that agreement, tariffs already increased should be canceled at the same time and by the same rate," Gao said at a news briefing.

The size of the reductions would depend on the agreement, he said.

Overseas financial markets rose on the signs of progress on a trade deal, while U.S. stock futures pointing to a strong opening.

"Market participants read this statement as a signal that a deal is done," Carl Weinberg, chief international economist with High Frequency Economics, said in a research note.

But Weinberg cautioned that a trade deal isn't over the finish line, noting that the Chinese Commerce Ministry conditions the removal of tariffs on first striking an agreement.