Following the G20 meeting in Buenos Aires, Argentina, over the weekend, President Donald Trump late Sunday took to Twitter to announce that China has agreed to “reduce and remove” the current 40-percent tariff on cars imported into the country from the United States.
China has agreed to reduce and remove tariffs on cars coming into China from the U.S. Currently the tariff is 40%.
— Donald J. Trump (@realDonaldTrump) December 3, 2018
The White House hasn't confirmed Trump's claims about China ending tariffs, and its last official statement regarding tariffs was Saturday's announcement of a 90-day pause on further escalation of tariffs between the U.S. and China agreed by the two countries as they continue negotiations. The pause means the U.S. will not raise its current 10-percent tariff on $200 billion worth of Chinese goods to 25 percent on Jan. 1, as originally scheduled.
China increased an existing tariff on U.S.-made cars from 25 to 40 percent in July in retaliation toward tariffs on various Chinese-made goods entering the U.S. announced by the Trump administration that month. This led to some firms such as BMW moving production from the US to China to avoid the tariffs. Lincoln this week said it was looking to accelerate its Chinese production plans to avoid tariffs of cars imported into the country from the U.S.
A total of $10.5 billion in new and used cars were shipped to China from the U.S. in 2017, according to the Census Bureau.
The news follows Trump's signing of the United States-Mexico-Canada Agreement (USMCA) trilateral agreement Friday at the G20 meeting. The deal is an update of the 25-year-old NAFTA agreement and includes a number of provisions that should benefit each country involved. For example, under the new deal, cars or trucks must have 75 percent of their components manufactured in the U.S., Mexico or Canada to escape any tariffs. This is up from the 62.5 percent in the original NAFTA agreement.
Congress won’t consider the agreement until 2019, after Democrats take over the majority in the House and could potentially block the deal. And since the approval process will take some time, most of the new USMCA provisions won’t go into effect until 2020, if passed.
Stay tuned.
