China Will Slash Car Tariffs, Trump Says, in a (Vague) Tweet #news @nytimes

China Will Slash Car Tariffs, Trump Says, in a (Vague) Tweet #news @nytimes




Business|China Will Slash Car Tariffs, Trump Says, in a (Vague) Tweet
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An auto plant in Harbin, China, belonging to a joint venture between Changan Automobile and Ford Motor Company. American cars for the Chinese market are generally made in Chinese factories.CreditCreditChina Network, via Reuters

BEIJING — After the negotiations over steak dinners were done, after he said his goodbyes to President Xi Jinping of China and after both governments issued their public statements aboutthe trade trucebetween the United States and China, President Trump had one more surprise to drop.

In a late-night Twitter post on Sunday, Mr. Trump said that China had agreed to make a small but politically significant concession to the United States: It would drop tariffs on imports of American-made cars.

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

“China has agreed to reduce and remove tariffs on cars coming into China from the U.S.,” he wrote. “Currently the tariff is 40%.”

The disclosure took trade watchers and auto industry figures in both countries by surprise. The issue of auto tariffs had not appeared in the public disclosures from either the United States or Chinese governments issued after the two sides hammered out their temporary trade-war truce.

It was unclear what China had agreed to do, if it had agreed to do anything at all. A spokesman for the Chinese Foreign Ministry referred questions to the Commerce Ministry. That ministry was silent, and its weekly news conference is not until Thursday. American officials were unavailable for comment.

The confusion is perhaps inevitable. Chinese leaders hoard information as a way of bolstering their political power. Add to that Mr. Trump’s predilection for trying to summarize complex issues in Twitter posts of a few words, and the potential for confusion can grow quickly.

China does not import many cars from the United States. American imports represent roughly 1 percent of the market, or about $10.5 billion worth. While Chinese drivers love to buy Chevrolets and Fords, those vehicles are generally made in Chinese factories through joint ventures between local and American carmakers.

A concession on auto tariffs could be significant, however. It could suggest that China is willing to bend on the issue of Chinese-made cars,an area of great concernfor the White House. The Trump administration worries that China could someday swamp American car lots with Chinese-made cars that could seriously damage the Detroit automakers.

Mr. Trump targeted Chinese-made cars when he issued his first tariffs on $50 billion in Chinese-made goods, marking the opening salvo of the trade war. China retaliated by raising tariffs on American-made cars to 40 percent, compared with 15 percent on cars from everywhere else.

Still, it was far from clear that was the case, and industry experts said the president’s Twitter post seemed to leave open a variety of interpretations.

One possibility is that Mr. Trump was mistakenly referring to China’s move this summer to reduce tariffs on auto imports from everywhere to 15 percent from 25 percent. China’s retaliatory tariffs brought the rate on American-made cars up to 40 percent.

Another possibility is that a deal on cars was part of a larger agreement alluded to in vague statements the United States issued on Saturday night, when the truce was first announced. The Trump administration said China had agreed to purchase “agricultural, energy, industrial, and other product from the United States.” As a practical matter, China would have to lower its tariffs on American-made goods or those purchases would be more expensive.

But that would be politically sensitive in China because the Buenos Aires accord allows the United States to keep its tariffs on $250 billion in Chinese-made goods, though Washington agreed to postpone a Jan. 1 increase in tariff rates.

If cuts in tariffs on American-made cars are in the works, the biggest beneficiaries are likely to be German. BMW and Mercedes both produce sport utility vehicles in the United States and export them all over the world, including a combined total of roughly 180,000 a year to China. That is still a tiny share of China’s auto market, which reached 24.7 million cars sold last year.

American brands in China usually have a local flavor. General Motors ships almost no American-built vehicles to China. Fiat Chrysler ships some Jeep Grand Cherokees but has a huge new factory in southern China to build most other Jeeps. Ford ships a few Lincolns but is in the process of shifting production of these models for the Chinese market to factories in China. Tesla ships electric cars to China from the United States but is preparing to build its own factory in Shanghai.

Any reduction in tariffs “is very good news for some niche products,” said Yale Zhang, the managing director of Automotive Foresight, a Shanghai consulting firm. “The international giants have already localized most of their mass production cars.”

Ailin Tang contributed research from Shanghai.


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