According to reports, trade-war tariffs on imported U.S.-made cars is anticipated to be reduced by China – a measure that had already been claimed to have been achieved by United States president Donald Trump as a part of the agreement that he had struck with the Chinese president Xi Jinping in their meeting in Argentina.
Source were quoted in the media said informed that China’s Cabinet have been submitted a proposal to the effect for its review. The proposal reportedly suggests reduction of import tariffs on US made cars into China from the current rate of 40 per cent to 15 per cent which would be the same rate that is applicable to import tariffs imposed on cars manufactured in other countries and imported into China,
The news resulted in the rise of shares of US car makers including those of Daimler AG, Ford Motor Co. and Tesla Inc.
The reports however reaffirmed that nothing is final about the measure. This measure could drive both China and the US to again focus on the proper implementation of the trade truce in the trade war that was agreed to earlier in the month in addition to it being a major concession that China would agree to as a climb down in the trade war. In the last weeks or so, the relations between the two countries have not been on good following the arrest of the Chief Financial Officer Meng Wanzhou of the Chinese tech giant Huawei Technologies Co. over allegations of the company breaching the US sanctions on Iran.
“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,” 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 U.S. autos and that’s another good, concrete step.”
According to reports there was telephonic conversation between top Chinese and American trade officials on Tuesday morning which are indications that the negotiations on trade between the two countries has at last been initiated despite the Huawei incident.
There was no immediate comment available from the Finance Ministry of China.
There was a rise of 3.3 per cent in the shares of BMW AG which has considerable business interest in China and engaged in the exports sport utility vehicles from the U.S. to the largest car market in the world. the tariffs would cost the company 300 million euros ($340 million) this year alone, the German luxury carmaker had previously said.
On the other hand another German car maker Daimler, which had cited the trade tariffs to be the most significant reason for it issuing a profit warning earlier, noted a 3.7 per cent rise in its shares following the news. There was an increase of 4.6 per cent in the share values of Volkswagen AG, while a 2.7 per cent hike in the shares of Ford was n\also noted. Tesla shares advanced by 1.8 per cent and General Motors Co. shares were up by about 3 per cent.
(Adapted from Bloomberg.com)