China to ‘reduce and remove’ tariffs on imports of American cars, Trump claims in tweet
- US president’s announcement comes after weekend talks with China and commitment to ‘immediately’ start negotiations on lowering trade barriers
US President Donald Trump said on Monday that China had agreed to cut tariffs on US cars imported into China.
In a tweet, Trump said: “China has agreed to reduce and remove tariffs on cars coming into China from the US. Currently, the tariff is 40 per cent.”
China’s tariff on car imports from all over the world was cut to 15 per cent from 25 per cent. But for US cars, China added a 25 per cent tariff over the summer, making the rate 40 per cent.
Trump’s tweet came after China and the United States reached an agreement on Sunday not to impose extra tariffs on each other’s imports from January 1.
A White House statement said both sides would immediately begin talks over a wide range of issues, including forced technology transfers, intellectual property protection, non-tariff barriers and cyber intrusions.
If the two sides cannot reach agreement over these matters within the next 90 days, the US will raise tariffs.
China has agreed to reduce and remove tariffs on cars coming into China from the U.S. Currently the tariff is 40%.
— Donald J. Trump (@realDonaldTrump) December 3, 2018
The White House said China would buy a not-yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other products from the US. China would also buy agricultural products from US farmers immediately.
Of China’s US$51 billion of vehicle imports in 2017, about US$13.5 billion came from North America, including sales of models made there by non-US manufacturers like BMW. About 10 per cent, or more than 280,200, cars China imported last year came from the US, according to China’s Passenger Car Association.
Any move to reduce or eliminate the extra tariff is a boon for carmakers such as Tesla, BMW and Daimler, which all produce cars in the US and import to China.
Trump last week ordered a separate review of China’s 40 per cent tariff on car imports from the US, 25 percentage points of which are the result of Chinese retaliation against Trump’s own tariffs on imports from China. The US has a 27.5 per cent tax on imported cars from China.
US exports of cars and light trucks to China were worth US$9.5 billion in 2017 and have dropped off significantly since China imposed its retaliatory tariffs over the summer that gave exporters in Europe and Japan a significant advantage.
China is the world’s biggest car market both in terms of demand and supply. But imported vehicles only got a small share in the market because more than 85 per cent of the models sold in China are assembled inside the nation through joint ventures.
Additional reporting by Bloomberg