China To Cut Tariffs On U.S. Cars After Trade War Truce

Marcus Newton
December 6, 2018

China has agreed to "reduce and remove" the 40-percent tariff it slaps on new cars imported from the United States, president Donald Trump wrote in a Twitter post.

The 90-day truce in the escalating trade war between the USA and China came during a dinner meeting between the two presidents following the G-20 summit of the world's biggest economies in Buenos Aires.

President Trump has agreed that on January 1, 2019, he will not increase tariffs on $200 billion worth of product from 10% to 25%.

The Trump-Xi meeting was the marquee event of Trump's whirlwind two-day trip to Argentina for the G-20 summit after the president canceled a sit-down with Russian President Vladimir Putin over mounting tensions between Russia and Ukraine.

The two presidents also agreed to begin negotiations on changes to forced technology transfer, intellectual property protection, and non-tariff barriers.

Trump, who joined Xi in calling a truce on an intensifying trade war between their two powerhouse countries, earlier touted a roll-back in Chinese tariffs on US-made cars.

The statement added that if the parties are unable to reach an agreement at the end of the 90-day period, the tariffs will be raised from 10 percent to 25 percent.

Regarding the impact on agriculture, Trump claimed Chinese purchases would immediately make farmers "a very BIG and FAST beneficiary", although there is no agreement yet on agricultural issues.

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Asian shares were mostly lower Tuesday as traders questioned whether a 90-day truce in a tariff battle will allow the US and China to resolve issues ranging from technology development to trade. China gets a delay on additional tariffs, while the US gets greater purchases of agriculture goods while retaining leverage to push for more structural changes to the economy.

But the US leader's tweet alone was sufficient to boost stock prices for European auto giants Daimler AG and BMW, the Reuters news agency noted on Monday.

The president also touted his personal relationship with Chinese President Xi, suggesting that it would be very productive in the future. China responded with retaliatory tariffs in the amount of 60 billion dollars. The tariff is now 40 percent.

Still, analysts cautioned the deal may have only bought some time for more wrangling over deeply divisive trade and policy differences, and said China's economy will continue to cool regardless under the weight of weakening domestic demand.

China has sought to bolster relations with other countries and forge new economic partnerships this year, as its relationship with the U.S. faces new strains over trade.

After the 2-1/2 hour meeting, White House chief economist Larry Kudlow told reporters the talks went 'very well, ' but offered no specifics as he boarded Air Force One headed home to Washington with Trump.

America and China have been in economic combat for months.

Xi avoids further immediate pressure on China's slowing economy, while Trump - scarred by last month's midterm elections that saw the Democrats regain control of the House of Representatives - can ease damage to agricultural USA states that export to China, particularly soybean producers.

Other reports by MaliBehiribAe

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