Published: Wed, December 05, 2018
Markets | By Otis Pena

China agrees to 'reduce and remove' tariffs on U.S. cars

China agrees to 'reduce and remove' tariffs on U.S. cars

During the meeting Saturday, Xi and Trump agreed to suspend any new tariffs and take steps to address the trade disputes, which over the past few months had threatened to spill over into a trade war between the world's two largest economies. Trump agreed to delay the scheduled USA tariff increase for 90 days while the two sides negotiate over the administration's technology-related complaints.

China is poised to start immediately purchasing more USA agricultural products, Trump said in a Monday tweet that China agreed to "reduce and remove" tariffs on imported American-made cars, an assertion that official in Beijing have refused to confirm.

It is noted that some $50 billion worth of Chinese imports already face 25 percent tariffs, while the 10 percent tariffs â€"which target a massive $200 billion in goods â€" will also remain in effect. But it added a 25 percent tariff on U.S. cars as trade tensions soared, bringing them to 40 percent. China also agreed to boost its purchases of agricultural and industrial goods to reduce its trade imbalance with the US, she said.

The White House called the meeting "highly successful", saying the USA will leave existing tariffs on $200 billion of Chinese goods at 10 percent and refrain from raising that rate to 25 percent as planned on January 1.

While Trump cited the US trade deficits with foreign nations as a reason for implementing the tariffs, the USA trade deficit with China has increased since the tariffs were announced.

On Saturday, Trump and Xi held a meeting on the G20 summit's sidelines.

"Further, we are encouraged by the Trump administration's commitment to engaging with the Chinese government in order to reach an agreement with respect to forced technology transfer and intellectual property protection", Hanvey said. They intend to start purchasing agricultural products immediately. Farmers, I LOVE YOU!' he tweeted.

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Ultimately, a meaningful, lasting deal is unlikely in the 90-day window. For example, the Chinese statement (and official Chinese media) does not mention the 90-day deadline, only that tariffs will not be raised for the time being and that the two sides will negotiate.

The president also touted an agreement with China to reduce tariffs on cars entering China from the United States.

The trade war has taken a toll on auto companies that manufacture in the USA, with the makers of Mercedes-Benz and its rival BMW both warning of lower profits this year as tariffs forced them to hike prices in China.

The U.S. imposes a 27.5-percent tax on imported cars and light trucks from China.

"He's the toughest negotiator we've ever at the USTR and he's going to go chapter and verse and get tariffs down, non-tariff barriers down and end all these structural practices that prevent market access", White House trade adviser Peter Navarro told National Public Radio earlier on Monday.

Trump, at his political rallies and news conferences, often praises the increase in USA military spending during his almost two years in the White House.

The truce boosted global markets on Monday with world stocks up almost 1 percent. "I don't agree with that", he said. China imported 280,208 vehicles, or 10 per cent of total imported cars, from the USA last year, according to China's Passenger Car Association. While the United States and China have agreed to negotiate, China appears unlikely to fundamentally alter its policies, and it is unclear whether Trump will be satisfied with a deal that falls considerably short of his demands.

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