China to cut tariffs on United States cars

Daniel Fowler
December 5, 2018

"However, I will say this: President Xi has never been this involved".

US stocks rose on Monday after President Donald Trump and Chinese President Xi Jinping called a truce in the countries' ongoing trade war.

U.S. Treasury Secretary Steven Mnuchin said on Monday there was a clear shift in tone at Buenos Aires from past discussions with Chinese officials, as Xi offered a clear commitment to open China's markets to U.S. companies.

The increases come after the USA and China said they had agreed to not increase tariffs for 90 days to allow for talks. That's piled pressure on auto companies that have relied on the country for growth amid declining vehicle sales in the U.S.

Yet reaching a permanent peace will hardly be easy.

"China has agreed to reduce and remove tariffs on cars coming into China from the US".

Earlier this year, China's tariff's on USA imported automobiles stood at 15 percent from 25 percent, Politico reported.

"This is a strongly market positive result for the short term, since over the past few days markets have been nursing hopes that a tariffs pause of this kind would happen", Terry Haines, head of political analysis at Evercore ISI, wrote in a note.

"The progress made at the talks in Buenos Aires is of momentous significance".

Trump's tweet did not give any further detail about the tariff cuts, such as when the deal had been reached or a new level for the Chinese levies. As per news agencies, following more than two hours of dinner talks between the two leaders, the White House said an increase of tariffs from 10 to 25 percent due to kick in on January 1 would now be put on hold for 90 days.

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The United States had a $335.4 billion trade deficit with China in 2017.

Trump's comment follows an earlier statement of vice president of China operations at the US-China Business Council, Jacob Parker, that the outcome of the most recent meeting between Donald Trump and his Chinese counterpart Xi Jinping would allow to delay possible further escalation of a trade war between the two countries and to find a long-term solution for better bilateral relations.

Prices on some Chinese new vehicles have soared as a result of the 40 percent tariffs the country has put on US -built cars and light trucks since the summer.

But can China be trusted?

Left out of Chinese media statements is the USA claim that a tariff deal is conditioned on the two countries resolving key issues within 90 days. Ford decided not to import a crossover-ized Focus from China, Volvo began sourcing the XC60 from Sweden rather than from China, Buick considered canceling the American-spec Envision, and Cadillac stopped selling the hybrid CT6 it builds on the outskirts of Shanghai.

Trump's tough trade position with China has hurt farmers trying to export soybeans, cotton, corn, and meat overseas.

Even so, the Buenos Aires breakthrough may calm investors who anxious about financial damage from the trade hostilities.

"China right now has major trade barriers-they're major tariffs-and also major non-tariff barriers, which are brutal". The Stoxx Europe 600 Index was up by 1.62 percent to 75.9100 at around 09:45 GMT, as carmakers remained at the forefront of gains.

In the meantime, just as Trump dialed back the drama on one trade front over the weekend, he magnified the tension on another.

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