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Trump caves in to China’s demands on tariffs during G20 meeting

05 December 2018

The agreement by President Donald Trump and his Chinese counterpart Xi Jinping on a cease fire on tariffs postpones the threat of more disruption for China's exporters and their Asian suppliers.

In a surprise announcement tweeted Sunday night, Trump also said China would "reduce and remove" tariffs of 40 percent on cars, though Beijing has yet to confirm the move.

Earlier this year, China's tariff's on USA imported automobiles stood at 15 percent from 25 percent, Politico reported.

China has agreed to reduce and remove tariffs on cars coming into China from the U.S. now the tariff is 40%.

With the United States and China locked in growing disputes over commerce and security that have raised questions about the future of their relationship, global financial markets next week will take their lead from the outcome of talks between Trump and Xi over dinner on Saturday. But for United States cars, China added a 25 per cent tariff over the summer, making the rate 40 per cent. Trump wrote on Twitter. First off, China and the US have a lot of disagreements, and three months is not a lot of time to solve them - especially since the two countries have been at it for over a year.

China's statement also placed greater emphasis on economic cooperation and restoring diplomatic relations, the kind of high-minded talk that for decades has been more typical of American presidents.

According to a readout from the White House, the two leaders agreed "that they will endeavor to have this transaction completed within the next 90 days". The sticking points include "forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture", according to an official White House statement. The countries have been at loggerheads over Chinese policies that make it hard for American businesses to set up shop in China, and that force them to share technology and know-how when they do.

Xi avoids further immediate pressure on China's slowing economy, while Trump - scarred by last month's midterm elections that saw the Democrats regain control of the House of Representatives - can ease damage to agricultural USA states that export to China, particularly soybean producers.

The lack of specificity is not limited to the promise that China will purchase more agricultural goods.

China's goal was to persuade Trump to abandon plans to raise tariffs on $200 billion of Chinese goods to 25 percent in January, from 10 percent at present.

Any move to reduce or eliminate the extra tariff is a boon for carmakers such as Tesla, BMW and Daimler, which all produce cars in the USA and import to China. "In that light, we will be watching the negotiations closely".

Both farmers and the auto industry have been struck in the trade war, as the United States and China hit each other with escalating tariffs.

These sales irk China because they directly conflict with Beijing's long-standing policy that there is only one Chinese government, and Taiwan is merely a breakaway province that will inevitably be reunited with the mainland. The confusion was exacerbated by the absence of a joint statement from the US and China following the dinner. If they fail to reach an agreement by the end of this period, the tariffs will be increased to 25 percent from 10 percent.

And experts are skeptical that this trade truce represents a legitimate headway.

Trump caves in to China’s demands on tariffs during G20 meeting