Trump Says China Has Agreed to Reduce, Remove Tariffs on Cars

Wednesday, 05 Dec, 2018

US President Donald Trump has held out the possibility of an extension of the 90-day trade truce with China but made clear he would revert to tariffs if the two sides could not resolve their differences.

Both countries had been locked into a trade war for much of the year, until Trump and Chinese President Xi Jinping agreed over the weekend to suspend new tariffs and re-enter talks. The move, if verified, would hand automakers from Tesla Inc.to Daimler AG and BMW AG a potential reprieve after higher levies hit sales in the world's biggest auto market. The downside for China is that it also needs USA sourced LNG as its insatiable gas demand expands amid Beijing's mandate that gas make up at least 10 percent of its power generation energy mix by 2020, with further earmarks set for 2030.

His comments relate to the 40% tariff China imposes on United States vehicle imports, which were brought in as part of the trade battle in July.

While Mnuchin said the president reserves the right to escalate tariffs should negotiations not pan out as planned, he cast the weekend's talks as a breakthrough in the administration's efforts to check China and said the discussion included everything from purchasing more USA goods to intellectual property, to currency manipulation.

CHINESE PURCHASES OF US GOODS The White House said China will agree to purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other products from the United States. But the magnitude and timing of such a reduction were unclear, the person said.

Uncertainty also surrounded the details of the broader trade war truce struck by the U.S. and China at the G20 summit. Auto sales in the world's second-biggest economy declined for a fifth consecutive month in October, bringing the market closer to its first annual drop in at least two decades.

The U.S. LNG sector also needs Chinese participation, however.

Tesla didn't respond to an email seeking comment while BMW's China unit didn't offer an immediate comment on Trump's tweet.

"Tariffs on US soybeans might drop as the two sides enter a honeymoon period".

More often than not, such statements are short on details, said Luqiu, who covered meetings between Chinese and foreign leaders during 20 years as a reporter with Hong Kong's Phoenix TV. An actual deal with China to drop tariffs could help offset the political pain associated with the GM layoffs. China Grand Automotive Services Co., which sells various vehicle brands and provides auto financing, surged by the 10 per cent daily limit in Shanghai. "China will be getting rid of tariffs". The U.S. now charges a 27.5 per cent tax on imported cars from China.

Trump's aggressive trade actions left in their wake a farm industry suffering from China's retaliation, hitting soybeans especially hard, and a business sector fraught with uncertainty, facing higher costs and holding off on investment.

China's tariffs on US soybeans mean they are $60 per tonne more expensive than those from top global supplier Brazil, which is due to begin harvesting a record crop in a few weeks time.

According to the White House, the US will still keep in place $200 billion of tariffs on Chinese imports but will not increase those tariffs from 10 percent to 25 percent after the start of the year as originally planned. We saw how that panned out with the North Korean denuclearization talks, where Trump appeared to believe he'd walked away with more than he actually got, so there's reason to be skeptical until more details appear.