China Unexpectedly Slashes Auto Tariffs After Trump Trade Truce

In an unexpected, but notable, victory for President Trump's aggressive trade agenda and exporters of cars around the globe, China's Ministry of Finance announced Tuesday morning that it would slash passenger car duties to 15%, further opening up the market that’s been a key target of the U.S. in its trade fight with Beijing. This comes less than a month after China decided to ease restrictions on foreign competition in its auto sector and also address some of the US's concerns about intellectual property theft.

The reduction follows a truce that Treasury Secretary Steven Mnuchin announced during a Sunday appearance on "Fox News Sunday". In response, the US has continued to reverse its policy of pressuring telecom giant ZTE, with Trump taking steps to rescue it.

“This is, without a doubt, positive news,” said Juergen Pieper, Frankfurt-based head of automobiles research at Bankhaus Metzler who spoke with Bloomberg.

Investors would agree, with European auto stocks gapping higher on the news.

But while the administration will no doubt rush to claim this as a victory, nobody expects the tariff cuts to be a gesture of good faith on China's part: The US is now also expected to make a concession, perhaps in addition to reducing pressure on ZTE. Though for Trump, caving on ZTE is still a pretty big deal, even as the administration has been adamant about framing it as a national security issue and not a trade issue.

"You can’t completely disregard the fact that there are certain imbalances in China’s favor. This could be a signal that if one side is making concessions, it could lead to the Americans easing some of their pressure as well.”

Meanwhile, according to Bloomberg, the import duty on car parts will fall to 6%, from 25%. But Bloomberg warns that the cuts are largely symbolic, since they will only impact about 4.2% of car sales - at least for now (about 29 million cars were sold in China last year, and as tariffs fall, foreign car buying could become more commonplace).

China's President Xi Jinping and his Vice Premier Liu He both advised that China would start implementing market liberalizations particularly in its automobile market in the coming months. The decision also comes after China announced over the weekend that China would end its anti-dumping investigation into sorghum. It has also signaled that there might be a review of Qualcomm's bid to acquire NXP Semiconductors, which would be tantamount to another olive branch.

US and European carmakers were, understandably, delighted about China's decision.

Ford and Porsche, maker of the Cayenne and Panamera car models, welcomed the announcement.

"Chinese customers will have a chance to enjoy an even optimized price and pursue more personalized options when buying a car," Porsche said in a statement in China.

As Reuters reminds us, Trump has said that China's 25% auto import rate was "stupid trade", while Tesla's Elon Musk has seemingly never stopped cheering about China's move toward auto-market liberalization, something that would greatly benefit Tesla, which may be reaching saturation in the US.

In a foreshadowing of this morning's trade news, President Trump tweeted late last night that "under our potential deal with China, they will purchase from our Great American Farmers practically as much as our Farmers can produce."

The Trump administration isn't always reliable - particularly when it comes to their comments about Chinese trade relations (recall when Larry Kudlow said talks were making progress, only for the Chinese to publicly embarrass him by declaring that there hadn't been any talks). But by scaling back the import duty, China has given the Trump administration a boost of confidence, and a badly needed foreign policy win that appears destined to calm choppy markets. That is, unless China - or the US - abruptly decide to break off the talks. Or something else happens - tensions in the Pacific, perhaps, or maybe North Korea - that sets the budding detente back.

Comments

gatorengineer Zero Point Tue, 05/22/2018 - 07:12 Permalink

Thats truly sad....

Obama care in place and expanded - Yep

Welfare Reform - Nope

Hillary Free - Check

Moar War - Check

Secured Border - Nope

H1B reform - Nope

Caved on Trade - Yep (this token is a joke, no way China is buying a crappy Chevy Cruze)

Liberal Scotus - Check

Maximum Goldman Suchs - You Bet Ya

Maximum Neocon - Yep

Education Reform - Nope

Smaller Giverment - Nope

Stronger 2A - Nope eroding it as fast as he can

Owned by Israhell - Absolutely

 

2nd worse president America has ever had, and is making a strong case to become the worst.

In reply to by Zero Point

JimmyJones Zero Point Tue, 05/22/2018 - 07:27 Permalink

All the right people still hate him, check

More money in my pocket, tax cuts. Check

Military helping with stopping illegal immigration, check

Exposing the deep State so it's common knowledge to the masses, check

Clapper losing his mind on national television, "we spied on a campaign and it's a good thing" check.

Survived endless attacks from MSM and Obama traitors, check.

Still moving forward with zero help from the Senate getting his appointments done, check

EPA, cleaning house while under non-stop MSM and Democrat and RINO attack, check

In reply to by Zero Point

NidStyles tmosley Tue, 05/22/2018 - 08:39 Permalink

No, delusional is waking up every morning before the sun rises to work until after it sets and calling everyone that doesn’t do the same a child. Just so some frigging Jew can collect on your stupid ass because you don’t value education.

 

That my friend is delusional, everything else is merely a justification of poorly thought out time  management.

In reply to by tmosley

crazzziecanuck tmosley Tue, 05/22/2018 - 08:56 Permalink

I don't believe it to be that outlandish.  For a lot of us, 2016 was no surprise at all.

Don't forget, people didn't really vote for Trump.  For starters, he got fewer votes than Hillary, and how many of Trumps votes were people voting against her specifically.  Can the same situation occur in 2020 where Democrats put up a candidate that people turn their nose in disgust and vote for Trump again?  If you look at people like Tom Perez and Howard Dean, I think it's already baked into the 2020 cake.

The loss in 2018 is just going to further cause the Democrats to lurch even further into the corporate-obsessed groupthink that they share with Republicans and call it "centrism".  Especially if this latest spying scandal is even half as bad as it seems.

The Democrats still haven't learned from losing 1000 seats nationwide and then lost to second worst Presidential candidate in the nation's history.  George W. Bush, probably a much bigger idiot than Trump, also won because of the Electoral College (he got fewer votes than Gore too), but he was re-elected in 2004 in spite of Iraq and other boondoggles.

 

In reply to by tmosley

gatorengineer JimmyJones Tue, 05/22/2018 - 08:04 Permalink

More money in my pocket, tax cuts. Check

-- you dont own a home in a northern state

Military helping with stopping illegal immigration, check

-- Fact Check Tweeted but not happening....

Exposing the deep State so it's common knowledge to the masses, check

-- So F'ing what nothing came of it, all it did is raise the temperature in the Frog pot.

Clapper losing his mind on national television, "we spied on a campaign and it's a good thing" check.

-- See above

Survived endless attacks from MSM and Obama traitors, check.

--And this did what exactly?

Still moving forward with zero help from the Senate getting his appointments done, check

--Fact Check, he is NOT filling dozens of Lower Court Open slots, that could have been huge

EPA, cleaning house while under non-stop MSM and Democrat and RINO attack, check

--Fact Check Tweeted but Absolutely NOTHING done

In reply to by JimmyJones

tmosley gatorengineer Tue, 05/22/2018 - 08:12 Permalink

>you dont own a home in a northern state

It isn't Trump's fault that you have chosen to live in a state run by spendthrifts. We aren't going to subsidize your state budgets any more.

>Fact Check Tweeted but not happening....

Wrong: https://www.military.com/daily-news/2018/04/10/national-guard-members-s…

>So F'ing what nothing came of it, all it did is raise the temperature in the Frog pot.

Is today the end of history? FFS.

>And this did what exactly?

https://www.conservapedia.com/Donald_Trump_achievements

>Fact Check, he is NOT filling dozens of Lower Court Open slots, that could have been huge

https://www.conservapedia.com/Donald_Trump_achievements:_The_courts

>Fact Check Tweeted but Absolutely NOTHING done

Basically, you're either fucking retarded or a traitor to our country spreading lies and misinformation. If you really are an engineer, then it must be the latter.

In reply to by gatorengineer

ChinaCatRider tmosley Tue, 05/22/2018 - 09:19 Permalink

">you dont own a home in a northern state

It isn't Trump's fault that you have chosen to live in a state run by spendthrifts. We aren't going to subsidize your state budgets any more."

 

I will be happy to give up the SALT deduction as long as 95% of the Fed Tax dollar go back to the originating state. Tired of those "low tax red states" pigs feeding off of my federal tax dollars then complaining the blue state taxes are too high. 

 

Fucking ignorants. 

In reply to by tmosley

shovelhead ChinaCatRider Tue, 05/22/2018 - 09:33 Permalink

Note: Those "low tax Red States" have an inordinate number of Federal and military facilities that suck tax dollars up like a Hoover. That's who you're subsidizing.

Someone's living high on the hog but it ain't Joe Taxpayer Red Stater. The Blue Staters favorite canard is flat ignorant and misinformed as most everything they "believe" in.

How you like them apples?

In reply to by ChinaCatRider

gatorengineer Zero Point Tue, 05/22/2018 - 07:59 Permalink

Worse than Clinton and Bush....

Absolutetly, because of the desperation of the world for leadership and change.  We have never needed as much as we do now and Trump is failing on all counts.  If Trump were in at the time of Clinton and Baby Bush, he absolutely would have been better than either, in that time.  However, in Americas time of Crisis Trump is a disaster. 

In reply to by Zero Point

Quantify gatorengineer Tue, 05/22/2018 - 08:40 Permalink

What's sad is your understanding of what a POTUS can legally do.

Obama care mandate killed. It will collapse

Welfare - Congress job

Hillary - protected by the swamp

War is inevitable, has been throughout history

Secured border - no funding by Congress

H1B reform in the works

China came to the table on trade as this article points out.

Liberal Soctus...whatever

Education you can bring a horse to water but can't make it drink. And its not the federal gov job to educate, far from it.

Smaller gov again, congress

In reply to by gatorengineer

GreatUncle buzzsaw99 Tue, 05/22/2018 - 06:55 Permalink

@buzzsaw99 - I still see it as Trump has dragged them kicking and screaming to the negotiations.

Not a chance for them, Iran, NK and EU all the same in a way.

The democrats portray him as the "orange monster", irrelevant you will play or you will be sidelined.

I think it is excellent, betting odds and we are in May the free trade bullshit will be odds on dead by Xmas :-).

That's a serious win for all trade deficit countries globally.

In reply to by buzzsaw99

Scipio Africanuz GreatUncle Tue, 05/22/2018 - 07:26 Permalink

Be careful what you ask for, what happened, is called "body language" geostrategy - I give you something publicly, you give something too - publicly, or otherwise.  China can afford to be magnanimous, the US negotiations team, should also extend some restraint, and not crow unnecessarily. This is what you call maturity, and the US team, need to demonstrate that.

A big win for Trump for sure. If he can break free of the need to bombast, he can achieve a lot geopolitically. Not every problem is a nail, requiring hammering. Kudos to the Chinese for this magnanimous gesture.

Team USA! Over to you...

In reply to by GreatUncle

crazzziecanuck JimmyJones Tue, 05/22/2018 - 09:18 Permalink

Do you honestly think that GM is going to be exporting American cars to China now because they lowered tariffs?

China is doing this because they know they can get away with lowering them.  This tariff reduction was simply a tiny little bone they threw at Trump so his American base can ejaculate over that piece of irrelevant news. Twitter Trump is making himself so predictable that even the Chinese can manipulate the crap out of him and yet makes Trump think he's still in charge...

This reduction was only made possible after the Chinese central committee realized that the tariff outlived its usefulness.  Whatever "American" cars will be sold in China, will be made in China, by "American" firms.  End of story.  And the other cars that the Chinese may want, aren't made by Americans.

If people think that this lowered tariff is actually going to permanently (or even temporarily) open up another line somewhere in the USA...

Nothing is truly going to change for the average man on the street, either here or over there in China.

In reply to by JimmyJones

BritBob Tue, 05/22/2018 - 06:46 Permalink

US - China trade The U.S. trade deficit with China was $347 billion in 2016. The trade deficit exists because U.S. exports to China were only $116 billion while imports from China were $463 billion. I guess that China has more to lose.