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.
“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.
Farmers will be a a very BIG and FAST beneficiary of our deal with China. They intend to start purchasing agricultural product immediately. We make the finest and cleanest product in the World, and that is what China wants. Farmers, I LOVE YOU!
— Donald J. Trump (@realDonaldTrump) December 3, 2018
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.
“Very productive conversations going on with China! Watch for some important announcements!” Trump tweeted Tuesday morning.
Very productive conversations going on with China! Watch for some important announcements!
— Donald J. Trump (@realDonaldTrump) December 11, 2018
It’s good news for American businesses if Trump manages to win more concessions from China.
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