Trade War Watch: China to Temporarily Suspend U.S. Auto Tariffs

Matt Posky
by Matt Posky
trade war watch china to temporarily suspend u s auto tariffs

China announced Friday its intent to reduce tariffs on imports of American-made cars as it tries to negotiate a trade deal with the United States. As you’ll recall, the People’s Republic imposed additional punitive tariffs on U.S. cars and auto parts earlier this year after promising it would lower the trade barriers on a global scale.

Things look to be different this time around. China has already taken steps to scale back the trade war and appears ready to continue down that path. Earlier this month, President Donald Trump and Chinese President Xi Jinping agreed to a truce in the trade war at their meeting in Argentina. This was followed by an announcement, via Trump’s Twitter account, claiming China had agreed to scale back auto tariffs against the United States.

It took a while, but the Chinese Finance Ministry has now confirmed that claim, saying it will remove the additional 25 percent tariff on car imports from the United States for three months starting January 1st. During the 90-day period, the two nations will attempt to negotiate a “mutually beneficial new Sino-US trade order.”

There are reasons to remain skeptical. Trump has taken a tough stance on trade, trying to bully China away from protectionist practices that see the United States losing ground. Meanwhile, Xi pledged China would cut car tariffs last spring. While the nation delivered on its promise in July, reducing foreign automotive duties from 25 percent to 15, American-made passenger vehicles were hit with an additional 25-percent retaliatory tariff just a few days later — negatively impacting the profits of major automakers that ship cars to China from the United States.

According to Bloomberg, both Washington and Beijing are unconvinced as to whether or not China is willing to water down its plans to match and exceed U.S. industrial might. The trade war has hurt both countries, but neither wants to come out looking like the loser.

From Bloomberg:

China’s top leaders are expected to meet next week to decide economic policies for 2019. Their focus will be on how they propose to sustain stable growth when faced with both uncertainty from the trade war and from the slowing domestic economy.

The temporary tax reduction for U.S. car imports comes as China heads for its very first annual vehicle sales decline in 28 years amid the trade war and an economic slowdown that’s undermining consumption momentum.

Car sales in China have fallen for six straight months after decades of almost uninterrupted growth. While there were other factors, the tit-for-tat jabs between the world’s biggest economies have played a role. The move by China would reduce tariffs on cars made in the U.S. to 15 percent from the current 40 percent, in line with what other countries pay.

Meanwhile, the value of U.S. passenger car exports to China has fallen by roughly $2.4 billion (about 30 percent) through the first nine months of 2018. But not all manufacturers were affected equally. General Motors and a handful of other automakers already have a large presence in China via partnerships with local companies, but brands like Daimler and BMW took a beating after deciding to build their high-volume exports in the United States.

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14 of 25 comments
  • Thelaine Thelaine on Dec 14, 2018

    The trade issue needs to be confronted. The Chinese shrugged off the pathetic rhetoric of previous administrations. I think the US finally has a president who was able to get China's attention. Even the spineless EU is leading from behind and making bleating noises now that they have seen US resolve. No one can predict the outcome, but it is about time a president took the China trade issue seriously. Their actions have caused massive damage and the policymakers have been too blind, fearful or corrupt to do anything meaningful about it. We never should have agreed to allow this dictatorship into the WTO.

  • Carguy67 Carguy67 on Dec 14, 2018

    Geez ... Am I the only American who thinks the tariffs/import restrictions are trivial compared to the IP theft/hacking/spying the Chinese are doing? I really don't care if Harbor Freight tools go up 10%; the Chinese are stealing our technology and R&D and will likely be using it against us in a naval confrontation in the not-too-distant future (of no small concern to me as my son is in Navy OCS studying Surface Warfare). Saying I don't think much of Trump is a major understatement, but he gets credit for confronting the Chinese, no matter how clumsily. Since he doesn't like to read or study and doesn't seem to understand nuance I hope he or his minions are up to confronting China on their outright theft of our prosperity.

    • See 11 previous
    • Art Vandelay Art Vandelay on Dec 16, 2018

      @thelaine Again, the longest time China has spent in space is a 30 day mission. That's quite a leap to Lunar and Martian colonies when ISS Astronauts routinely do 12 months. We are at a point where low Earth orbit has become munda enough that NASA isn't even bothering with it instead privatizing it.

  • Lou_BC "Owners of affected Wrangles" Does a missing "r" cancel an extra stud?
  • Slavuta One can put a secret breaker that will disable the starter or spark plug supply. Even disabling headlights or all lights will bring more trouble to thieves than they wish for. With no brake lights, someone will hit from behind, they will leave fingerprints inside. Or if they steal at night, they will have to drive with no lights. Any of these things definitely will bring attention.I remember people removing rotor from under distributor cup.
  • Slavuta Government Motors + Government big tech + government + Federal police = fascist surveillance state. USSR surveillance pales...
  • Johnster Another quibble, this time about the contextualization of the Thunderbird and Cougar, and their relationship to the prestigious Continental Mark. (I know. It's confusing.) The Thunderbird/Mark IV platform introduced for the 1971 model year was apparently derived from the mid-sized Torino/Montego platform (also introduced for the 1971 model year), but should probably be considered different from it.As we all know, the Cougar shared its platform with the Ford Mustang up through the 1973 model year, moving to the mid-sized Torino/Montego platform for the 1974 model year. This platform was also shared with the failed Ford Gran Torino Elite, (introduced in February of 1974, the "Gran Torino" part of the name was dropped for the 1975 and 1976 model years).The Thunderbird/Mark series duo's separation occurred with the 1977 model year when the Thunderbird was downsized to share a platform with the LTD II/Cougar. The 1977 model year saw Mercury drop the "Montego" name and adopt the "Cougar" name for all of their mid-sized cars, including plain 2-doors, 4-doors and and 4-door station wagons. Meanwhile, the Cougar PLC was sold as the "Cougar XR-7." The Cougar wagon was dropped for the 1978 model year (arguably replaced by the new Zephyr wagon) while the (plain) 2-door and 4-door models remained in production for the 1978 and 1979 model years. It was a major prestige blow for the Thunderbird. Underneath, the Thunderbird and Cougar XR-7 for 1977 were warmed-over versions of the failed Ford Elite (1974-1976), while the Mark V was a warmed-over version of the previous Mark IV.
  • Stuart de Baker This is depressing, and I don't own one of these.