China to Suspend Punitive Tariffs on U.S. Cars and Auto Parts for Three Months
December 14 2018 - 10:37AM
Dow Jones News
BEIJING -- China is temporarily removing the punitive tariffs
placed on U.S.-made cars and auto parts in a concession intended to
smooth trade negotiations.
For the three months starting Jan. 1, cars imported from the
U.S. will no longer be hit with an extra 25% tariff, while extra
levies of varying rates on auto parts will also be removed,
according to a statement released by the Finance Ministry on
Friday. With the scrubbing of those penalties, cars imported from
the U.S. will face a 15% tariff and auto parts a 6% tariff, the
same rates applied to imports from other countries.
The easing of tariffs on U.S.-made cars and parts is part of
Beijing's effort to generate momentum toward a trade deal with
Washington. President Xi Jinping and President Trump, meeting on
the sidelines of a recent multilateral summit in Buenos Aires,
agreed to a 90-day tariff truce to give breathing room to
negotiations.
Mr. Trump and senior administration officials have previously
said Beijing would remove the auto tariffs. Still, the concession
is a notable one for Beijing: U.S. automobile exports to China
totaled $9.5 billion last year, according to the U.S. Department of
Commerce, topped only by aerospace and agriculture exports.
The Chinese government cited the agreement reached by Messrs.
Trump and Xi in its statement about removing the tariffs on autos
and parts. In total, 211 types of cars and auto parts will be
exempt from the penalties, according to information from the
Finance Ministry.
Companies likely to see immediate benefits from the suspension
include Tesla Inc. and Ford Motor Co., as well as German auto
makers BMW AG and Daimler AG, which build sport-utility vehicles in
the U.S. for export to China. The combined 40% border levy on
U.S.-built cars hit the German firms hard, causing them to weigh
moving some production out of the U.S. to China to meet local
demand there and avoid the tariffs.
China imposed the extra levy of 25% this July in retaliation for
U.S. penalties on imports of vehicles, part of the tit-for-tat that
has seen the government place tariffs on goods covering about 60%
of the countries' total trade.
As part of the tariff cease-fire, the U.S. agreed to put off a
plan to raise tariffs on $200 billion of Chinese goods to 25% from
10% on Jan 1. That concession was widely publicized by Chinese
officials and state media, though they were initially silent about
what China agreed to do in return.
On the U.S. side, a stream of presidential tweets and statements
from senior U.S. officials have said Beijing agreed to the auto
tariff cut as well as to increased purchases of American
agricultural, energy and other products.
President Xi's economic envoy, Vice Premier Liu He, told senior
U.S. officials about the tariff reduction in a phone call earlier
this week, according to people familiar with the discussion.
Beijing is also making other efforts to try to settle the trade
dispute. State-owned Chinese companies including Cofco and
Sinograin in recent days have resumed their purchases of U.S.
soybeans.
Chinese officials are working on a new industrial policy to
replace the Made in China 2025 plan, said people familiar with the
matter. The state-led industrial policy -- aimed at enabling
Chinese companies to dominate industries from robotics to electric
vehicles and mobile internet networks -- is a focal point of U.S.
complaints that Beijing engages in unfair trade practices that put
foreign firms at a disadvantage.
--Lin Zhu and Lingling Wei contributed to this article.
(END) Dow Jones Newswires
December 14, 2018 10:22 ET (15:22 GMT)
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