China to suspend extra 25% tariff on US cars, parts

Employees inspect cars at a Mercedes-Benz factory in Alabama. China's suspension of the 25 per cent punitive tax on US cars will bring tariffs back to the 15 per cent imposed on all foreign vehicles.
Employees inspect cars at a Mercedes-Benz factory in Alabama. China's suspension of the 25 per cent punitive tax on US cars will bring tariffs back to the 15 per cent imposed on all foreign vehicles.PHOTO: AGENCE FRANCE-PRESSE

BEIJING • China pressed on with its trade war truce with the United States yesterday, announcing it will suspend extra tariffs added to US-made cars and auto parts for three months from Jan 1 next year.

The move is another sign that the ceasefire has not been derailed by the recent arrest in Canada of a top Chinese telecoms executive at the behest of the US.

Beijing raised tariffs on American-made cars and auto parts this summer by 25 per cent in retaliation to US tariffs on US$50 billion (S$69 billion) of Chinese goods.

Halting the punitive duties brings the tariffs back down from 40 per cent to the 15 per cent imposed on all foreign vehicles.

"Suspension of the tariffs is a concrete measure to implement the consensus reached by the two heads of state," said the announcement by the State Council's Tariff Commission Office, noting it applied to 211 product codes.

US President Donald Trump and Chinese leader Xi Jinping agreed on the sidelines of the Group of 20 summit in Buenos Aires on Dec 1 to a 90-day truce while they tried to find a solution to the escalating trade dispute.

Top trade negotiators talked on the phone this week to discuss a timetable for the trade talks and yesterday's announcement confirms a Trump tweet from Dec 2 that China would act on the auto tariffs.

 

"We hope that both sides will, in accordance with the consensus reached by the two heads of state, on the premise of mutual respect, mutual equality, faithfulness, words and actions, and intensify consultations in the direction of cancelling all of the extra tariff increases," the State Council's statement said.

The tariff suspension will benefit US carmakers like Tesla and Ford, which have seen their China sales tumble amid the trade tensions.

"It is essential that governments work together to advance balanced and fair trade. We look forward to learning more," a spokesman for Ford said after Mr Trump announced earlier this month that China would cut car tariffs.

Maintaining and resolving the trade truce could help stabilise sentiment in China, where confidence in the economy has been hurt by the trade frictions with the US, a key trade partner.

Yesterday, economic data showed that Chinese consumer spending grew at its slowest pace in 15 years, raising the prospect that Beijing could turn to fresh stimulus measures to help the sputtering economy.

AGENCE FRANCE-PRESSE

 
A version of this article appeared in the print edition of The Straits Times on December 15, 2018, with the headline 'China to suspend extra 25% tariff on US cars, parts'. Print Edition | Subscribe