China appears to be moving forward with plans to lower tariffs on American car imports, a concession to the Trump administration, who called for the Asian nation to “reduce and remove” retaliatory tariffs on American goods.
As Bloomberg reports, a proposal to cut the tariffs has been submitted to China’s legislature, according to anonymous sources. The plan would cut the tariffs on imported American cars from 40 percent to 15 percent. It’s unclear when, or if, the Chinese government will debate the proposal or put it into effect if passed.
Nevertheless, the news energized American car stocks; shares of Daimler AG, Ford Motor Co., Tesla Inc., and others all climbed following the news.
Earlier in 2018, the Trump administration imposed a series of tariffs on various goods over the course of a few weeks, as BBC News reported at the time. The announcement of the tariffs came out of nowhere, purportedly with no consultation from advisers or economists. Further, as Reuters reported, the majority of economists believed that the tariffs would hurt American farming and manufacturing.
And in fact, as the Hill reported in October, the tariffs have been hurting Americans. That’s because countries affected by the tariffs have either imposed retaliatory tariffs on American goods or have sought other markets for goods that they normally purchased from American companies.
Businesses have been laying off workers, or at the very least, cutting back on expansion and hiring plans. Other manufacturers have moved their factories abroad. Farmers have found themselves awash in grains, hogs, or other products that they can’t get rid of for lack of buyers; the Chinese (and others) having sought out cheaper products from Argentina, Brazil, and other countries.
In Argentina earlier this month at the G20 Summit, Trump tweeted that he and Chinese President Xi Jinping had worked out a deal to dial back the competing tariffs and call for a truce in their trade war.
Freya Beamish, chief Asia economist at Pantheon Macroeconomics, said that it’s a good sign for both countries.
“Now we are seeing the possibility that China will come through with reductions of tariffs on U.S. autos and that’s another good, concrete step.”
However, thorny issues remain between the U.S. and the Chinese, including the arrest of Huawei Technologies Co. Chief Financial Officer Meng Wanzhou over sanctions violations. Whether or not the detainment of the Huawei CFO will derail efforts to dial back the trade war remains to be seen.