‘China set to cut US auto tariffs’
THE TRADE WAR HAS TAKEN A TOLL ON CAR COMPANIES THAT MANUFACTURE IN THE US, SOME OF THEM WARNING OF LOWER PROFITS THIS YEAR
BEIJING: China is moving toward cutting its trade-war tariffs on imported Us-made cars, a step already claimed by President Donald Trump as a concession won during trade talks in Argentina.
A proposal to reduce tariffs on cars made in the US to 15% from the current 40% has been submitted to China’s Cabinet to be reviewed in the coming days, according to people familiar with the matter. Shares of carmakers including Daimler AG, Ford Motor Co. and Tesla Inc rose on the news.
The step hasn’t been finalised and could still change. While reversing the retaliatory duty is a major climb-down by Beijing, it could re-focus the two sides toward implementing the tradewar truce agreed earlier this month.
Relations have since been shaken by the arrest of Huawei Technologies Co Chief Financial Officer Meng Wanzhou in connection with sanctions violations.
“Last week, events seemed to conspire to throw the truce into disarray, but the underlying incentives of both sides at the moment are to try to maintain that truce,” said Freya Beamish, chief Asia economist at Pantheon Macroeconomics Ltd.
“Now we are seeing the possibility that China will come through with reductions of tariffs on US autos and that’s another good, concrete step.”
Top Chinese and American trade officials spoke by phone on Tuesday, signalling that dialogue between the two nations on trade issues is at least continuing despite the ongoing tension over Huawei.
BMW AG, which exports sport utility vehicles from the US to China, rose as much as 3.3% to 72.40 euros Frankfurt.
Daimler, which named the tariffs as the key reason in a profit warning in June, gained as much as 3.7%. Volkswagen AG rallied 4.6%, while Ford advanced 2.7% in premarket trading. General Motors Co was up about 3% and Tesla added 1.8%.
In July, China had boosted the tariff on American-made cars to 40% as part of retaliatory measures against the US.
Following a summit on trade in Buenos Aires earlier this month, Trump jolted global auto stocks with a tweet that China agreed to “reduce and remove” tariffs on imported American-made cars, something China did not confirm at the time.