Commentary

Car Companies Roar Back as China Blinks in Trade War, Proposes Enormous Drop in Auto Tariffs

The shares of global car manufacturers began to rise early Wednesday morning amid reports that China will be reducing its auto tariffs.

China’s cabinet received a proposal to eliminate the 25-percent surcharge on U.S. cars imported to China, according to Bloomberg.

If the proposal is finalized, China’s tariffs on cars made in the U.S. would drop to 15 percent from the current 40 percent.

Investors seemed to wager on China’s softening stance on auto imports. Toyota’s stocks rose as much as 2 percent in Tokyo on Wednesday, and Hyundai rose as much as 7 percent in Seoul, Bloomberg reported.

This report falls in line with statements from President Donald Trump earlier this month, who announced negotiations with China regarding tariffs.

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“China has agreed to reduce and remove tariffs on cars coming into China from the U.S. Currently the tariff is 40%,” Trump said via Twitter last week.

Trump later tweeted that China would begin purchasing agricultural products from the U.S.

“Farmers will be a very BIG and FAST beneficiary of our deal with China. They intend to start purchasing agricultural product immediately,” Trump tweeted.

Will Trump's negotiations be good for Americans?

So far, it seems like Trump’s tough stance on China was effective in making it back down.

Some critics worried that Trump’s trade war with China would needlessly escalate, causing higher prices for consumers.

It’s good that Chinese consumers will purchase more American goods, but the fear is that high tariffs on Chinese goods could push some of the tax burden on American consumers if suppliers are unable to absorb the brunt of the tariffs.

However, Trump seems confident that negotiations are going well.

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“Very productive conversations going on with China! Watch for some important announcements!” Trump tweeted Tuesday morning.

It’s good news for American businesses if Trump manages to win more concessions from China.

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Malachi Bailey is a writer from Ohio with a background in history, education and philosophy. He has led multiple conservative groups and is dedicated to the principles of free speech, privacy and peace.
Malachi Bailey is a writer from Ohio with a passion for free speech, privacy and peace. He graduated from the College of Wooster with a B.A. in History. While at Wooster, he served as the Treasurer for the Wooster Conservatives and the Vice President for the Young Americans for Liberty.
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