Trump tweets China to cut tax on US-made cars, revs up auto stocks

WASHINGTON: US President Donald Trump said China had agreed to cut import tariffs on American-made cars, buoying shares in BMW and Daimler AG which manufacture in the United States for export to the world’s biggest auto market.

Shares of Chinese car dealers also perked up on hopes that such a move could revitalise the domestic auto market that is poised for its first annual sales contraction in decades amid cooling economic growth and a debilitating US-China trade war.

Trump, fresh from agreeing a 90-day ceasefire in his trade war with China at the meeting of the G20, said on Twitter “China has agreed to reduce and remove tariffs on cars coming into China from the US. Currently the tariff is 40%”.

The move, if realised, would bolster US carmakers who were hit hard when China ramped up levies on US-made cars in July as part of a broad package of retaliatory tariffs amid the sprawling trade war between Washington and Beijing. “If they cancel the extra 25% tariff on US-made cars, then we will see positive signs for imported cars,” Wang Cun, director of the China Automobile Dealers Association’s import committee, told reporters in Beijing.

Beijing raised tariffs on US auto imports to 40% in July, forcing many carmakers to hike prices in a major hit to the roughly US$10bil worth of passenger vehicles the United States sent to China last year.

That put US-made car brands like Tesla Inc and Ford Motor Co’s Lincoln at a major disadvantage as the move came soon after China slashed auto import tariffs for the wider market to 15% from 25%.

Trump’s tweet did not give any further detail about the tariff cuts, such as when the deal had been reached or a new level for the Chinese levies.

In early European trade yesterday, shares in Germany’s BMW, Volkswagen ASG and MercedesBenz parent Daimler rose between 4% and 7%.

In China, listed car dealers such as Grand Automotive, Pangda Automobile Trade and Sinomach Automobile climbed on the news, with some local carmakers falling back.

Trump and Chinese President Xi Jinping agreed to halt new tariffs during talks in Argentina on Saturday, following months of escalating tensions on trade and other issues.

Major US automakers said they were unaware of the lower tariffs on exports to China.