Trump says talks with China 'very productive'

US President Donald Trump was upbeat about contacts with China as the two countries discussed a road map for the next stage of their trade talks on Dec 11, 2018.
US President Donald Trump was upbeat about contacts with China as the two countries discussed a road map for the next stage of their trade talks on Dec 11, 2018.PHOTO: REUTERS

WASHINGTON (REUTERS, BLOOMBERG) - US President Donald Trump was upbeat on Tuesday (Dec 11) about contacts with China as the two countries discussed a road map for the next stage of their trade talks.

"Very productive conversations going on with China! Watch for some important announcements!" Mr Trump said in a Twitter post after a telephone call between Vice-Premier Liu He and US Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer.

China is reported to be moving towards cutting its trade-war tariffs on imported US-made cars, a step claimed by Mr Trump as a concession won during trade talks in Argentina. 

A proposal to reduce tariffs on US-made cars from the current 40 per cent to 15 per cent has been submitted to China’s Cabinet to be reviewed in the coming days, Bloomberg reported, citing sources.

Shares of carmakers, including Daimler, Ford Motor and Tesla Motors, rose on the news.

The step has not been finalised and could still change. While reversing the retaliatory duty is a major climb-down by Beijing, it could refocus the two sides towards implementing the trade-war truce they agreed on. 

Mr Trump and Chinese President Xi Jinping agreed at a Dec 1 meeting in Argentina to a truce that delayed a planned Jan 1 US increase of tariffs from 10 per cent to 25 per cent on US$200 billion (S$275 billion) worth of Chinese goods.

In July, China had boosted the tariff on US-made cars to 40 per cent as part of retaliatory measures. 

Following the G-20 summit in Buenos Aires, Mr Trump jolted global auto stocks with a tweet that China agreed to “reduce and remove” tariffs on imported US-made cars, something China did not confirm at the time. 

Mr Lighthizer had said on Sunday  that unless US-China trade talks wrapped up successfully by March 1, new tariffs would be imposed, clarifying that there was a “hard deadline”.

Mr Lighthizer, Mr Mnuchin and Mr Liu on Tuesday discussed a road map for the next stage of trade talks, signalling that dialogue between the two nations on trade issues is at least continuing, despite the ongoing tension over Huawei.

Relations have been shaken by the arrest of Huawei Technologies’ chief financial officer Meng Wanzhou in connection with sanctions violations.

“Last week, events seemed to conspire to throw the truce into disarray, but the underlying incentives of both sides at the moment are to try to maintain that truce,” said Ms Freya Beamish, chief Asia economist at Pantheon Macroeconomics. 

“We are seeing the possibility that China will come through with reductions of tariffs on US autos.” 

China’s commerce ministry said in a statement yesterday: “Both sides exchanged views on putting into effect the consensus reached by the two countries’ leaders... and pushing forward the timetable and road map for the next stage of economic and trade consultations.” 

The Wall Street Journal, citing sources, said Mr Liu planned to go to Washington after the new year. The Harvard-educated Liu, President Xi’s top economic adviser, is leading the talks on the Chinese side.

Some global financial markets have been jittery about the clash between the world’s two biggest economic powers over China’s huge trade surplus with the US and Washington’s claims that Beijing is stealing intellectual property and technology.

Longer term, China has a lot to gain from free trade in cars as Chinese manufacturers such as Guangzhou Automobile Group and Geely Automobile Holdings look to move overseas. The US currently charges a 27.5 per cent tax on imported cars from China.