In the latest sign of an apparent de-escalation of trade disputes, China announced this week that it will be reducing its tariffs on automobiles and automotive parts.
As Reuters reported, import taxes on vehicles are currently set at 25 percent in most cases. As of July 1, the Chinese Ministry of Finance said that rate will drop to 15 percent.
Likewise, the existing 10 percent tariff on car parts will be cut nearly in half to 6 percent.
The news comes on the heels of U.S. Treasury Secretary Steven Mnuchin’s announcement on Sunday that wider trade talks with China are ongoing.
Under our potential deal with China, they will purchase from our Great American Farmers practically as much as our Farmers can produce.
— Donald J. Trump (@realDonaldTrump) May 21, 2018
“We are putting the trade war on hold,” Mnuchin said this week. “Right now, we have agreed to put the tariffs on hold while we try to execute the framework.”
President Donald Trump has long lamented trade imbalances between the two nations and has hinted in recent months that he might favor imposing import levies on a wide range of Chinese products.
Asked about the recent US trade talks with China, Pres Trump said he's not happy with the outcome. "China has made a fortune….I’m not satisfied but we have a long way to go.”
— Mark Knoller (@markknoller) May 22, 2018
In an April statement, Trump cited “China’s unfair retaliation” for his decision to instruct the United States Trade Representative Robert Lighthizer “to consider whether $100 billion of additional tariffs would be appropriate.”
That announcement came just days after the imposition of tariffs on $50 billion in Chinese imports.
The war of words escalated when a statement from Chinese officials made it clear that they did not want to enter a trade war with the U.S. but were “not afraid of fighting it.”
Chinese Commerce Ministry spokesman Gao Feng released a statement on the same day as Trump’s announcement.
“We are prepared and have already formulated very detailed countermeasures,” he said.
The Chinese announcement this week could provide a financial boost to numerous auto brands, but is expected to bestow the biggest benefit to luxury brands including U.S.-based Tesla.
One Nissan executive said the Japanese brand’s luxury badge is expected to see a big uptick in sales to China after the reduction.
“Benefits are huge for our business, especially Infiniti,” the source said.
Another individual within the same company said German luxury car brands could see the biggest boost “because of the volume of imported cars they sell.”
Reduced tariffs will open China, which is already the world’s largest auto market, up to more automotive choice.
Investors also reacted positively to the news, with the U.S. stock market rebounding on Monday, in part because of Mnuchin’s assurance that trade tensions are easing. Uncertainty about the future of international trade had sparked a downward trend on Wall Street in recent weeks.
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