Home >News >World >China suspends new tariffs on US cars as trade war eases
US President Donald Trump (left) and Chinese President Xi Jinping. Photo: P
US President Donald Trump (left) and Chinese President Xi Jinping. Photo: P

China suspends new tariffs on US cars as trade war eases

Beijing raised tariffs on American-made cars and auto parts this summer by 25% in retaliation for US tariffs on $50 billion of Chinese goods

China will suspend additional tariffs on US-made vehicles and auto parts for three months starting 1 January 2019, the country’s finance ministry said on Friday, following a truce in a trade war between the world’s two largest economies.

The ministry of finance, in a statement on its website, also said it hopes China and the US can speed up negotiations to remove all additional tariffs on each other’s goods.

“This is a good signal that China and the US are on track to solve the trade war," said Wang Cun, director of the China Automobile Dealers Association’s import committee. “Carmakers might be ordering a large number of imported cars now."

Shortly after the Chinese finance ministry’s announcement, Tesla Inc. said it had cut prices on its Model S and Model X vehicles in China.

Joe Hinrichs, president of Ford Motor Co.’s Americas unit, also welcomed China’s announcement, noting that the US auto maker exported nearly 50,000 US-built vehicles to the country in 2017.

“As a leading exporter of vehicles from the US, we are very encouraged by China’s announcement today," Hinrichs said.

“We applaud both governments for working together constructively to reduce trade barriers and open markets," Hinrichs added.

Auto exports between the two countries are, however, relatively small. China exported 53,300 vehicles to the US market last year and imported 280,208 US-manufactured vehicles, according to data from the China Automotive Technology and Research Center (CATARC), a government-affiliated think-tank.

In contrast, in the first 11 months of this year, China produced 25.3 million cars, down 2.6% from the same period last year, industry figures showed.

Wang said carmakers in China that imported cars from the US had seen a 30% decline in volume in the first ten months of the 2018, but the tariff cut would bring imports back to previous levels.

The latest announcement on the planned tariff suspension followed China’s first major purchase of US soybeans since US President Donald Trump and his Chinese counterpart Xi Jinping’s landmark talks on trade in Argentina on 1 December.

The tariff suspension and soybean purchase are early signs that the bitter trade war between China and the US may be starting to thaw.

In Argentina, Trump and Xi agreed to a truce that delayed the planned 1 January US increase of tariffs on $200 billion worth of Chinese goods while they negotiate a trade deal.

A Trump official said on Tuesday that China had agreed to cut tariffs on US-built cars and auto parts to 15% from 40%.

China’s tariff cut was communicated during a phone call between vice premier Liu He, US trade representative Robert Lighthizer and US treasury secretary Steven Mnuchin, the official said.

Earlier this year, China hiked its tariffs on US autos and parts after the US raised its tariffs on Chinese vehicles and parts to 27.5%.

China will now suspend 25% tariffs on 144 US vehicles and auto part items and 5% tariffs on 67 auto items between 1 January and 31 March, the finance ministry said.

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