President Trump has confirmed that China has agreed to cut tariffs on car imports from the United States. The announcement was made late Sunday through a tweet. China had imposed a tariff of nearly 40% on all US car imports. Trump said that there was an agreement between the two countries to reduce this figure and ultimately remove it. The president didn’t specify when this will happen or how far the Chinese government is willing to go in reducing the current figures. In addition to this, there was no immediate statement from China either. Attempts by various news agencies to get a confirmation on the president’s tweet were not fruitful.
Trump’s announcement came after he met Chinese President Xi Jinping on Saturday. The two leaders agreed to de-escalate the ongoing trade tensions in order to pave way for negotiations. However, Beijing already had a term plans to cut car import tariffs. In an announcement that was made in April this year, President Xi said that China was working on a plan to reduce the tariffs and three months later, a decision was made. China cut import tariffs for cars from 25% to 15%. However, days later Beijing went on to impose additional tariffs on American cars. The tariffs amounted to 25% which was compounded on the 15% that was already charged on all car imports. This meant that US carmakers had to pay up to 40% in tariffs to ship cars into China.
The additional tariffs were part of a trade escalation between the US and China and were imposed during the early stages of the trade war. The Chinese tariffs have definitely had an effect on the profits of many US carmakers. But Trump’s tweet could signal the beginning of some concerted effort by the two countries to ease trade relations. Many analysts, however, argue that the lack of specifics on the president’s tweet casts a shadow of doubt on any hope that these issues will be resolved any time soon. Also, it’s not clear what the US is willing to give up in order to get car exports to China zero-rated.
During the meeting with Trump, Chinese officials said they were willing to work on reducing the deficit with the US but requested a structured approach in handling this. Some of the demands made by the White House have been described as untenable by many analysts and the trade escalation isn’t helping either. US farmers in particular who export a substantial amount of their produce to China have suffered the most.
President Trump’s tweet comes on the heels of another trade breakthrough. Trump joined the Mexican President and Canadian Prime Minister to sign the United States-Mexico-Canada Agreement. The trade deal is a negotiated replacement for NAFTA but hasn’t yet been ratified. The ratification could prove problematic now that the Democrats have taken control of the House. Some Democratic lawmakers have expressed concern over certain aspects of the new deal and this could hamper efforts by the White House to ratify the deal as soon as possible. But dealing with China will be Trump’s biggest challenge.