Trump announces Chinese rollback of auto tariffs

Fredrick Soto
December 6, 2018

The Republican president called their agreement - which Washington hopes will help close a yawning trade gap with the Asian giant and help protect U.S. intellectual property - an "incredible" deal. He referenced U.S. Customs de minimis regulations that allow individuals to import goods valued at up to $800 per package without paying import duties. The tariff on those goods will remain the 10 percent that became effective in September (in addition to any pre-existing tariffs on those goods) for at least 90 days from the truce agreement of December 1, so the 25 percent tariff increase is pushed out by about 60 days. Existing tariffs, however, will stay in place.

Earlier this year, the Trump administration imposed new tariffs on almost $250 billion worth of Chinese goods, to force Beijing to end its unfair practices. Trump was set to raise tariffs from 10 to 25 per cent on $200 billion in Chinese goods, starting January 1. China's silence indicates that the two leaders likely discussed the issue and reached a tentative agreement during their dinner meeting. Also, the Chinese government made no mention of cutting vehicle tariffs. These tariffs also will not be implemented before March 1, 2019. The statement notes that the exact amount has not yet been agreed upon.

Farmers sold $19.6 billion in products to China previous year, according to the Farm Credit Administration Office of Regulatory Policy. On its part, China said it would raise its purchases of products from the United States' industrial, energy and agricultural sectors, which has even directly affected when China raised retaliatory tariffs. Both countries will accelerate negotiations with an aim of withdrawing all tariffs that were imposed and both countries would make mutual visits in due course. Fentanyl is a synthetic opioid primarily produced in China that has caused thousands of deaths in North America in recent years.

If the tariffs are removed altogether, it would be "much more advantageous" for the German carmakers rather than USA brands, he said.

Nevertheless, businesses should continue to brace themselves for heightened tariffs. It has involved both countries imposing tariffs on billions of dollars' worth of goods, with the U.S. hitting Chinese goods with $250bn of tariffs since July, and China retaliating by imposing $110bn worth of duties on USA products.

"We will be meeting with President Xi tonight.and we'll be talking about a thing called trade and probably other things but primarily trade".

Further, the differences between the statements released by the United States and China suggest that the two sides hold substantial gaps about expectations for negotiations. But as trade lawyer and Cato Institute scholar Scott Lincicome points out, "with no joint statement and list of actual/concrete deliverables, how will both sides (and the public) measure success or failure in 90 days?"

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