Trump: China to cut tariffs on US-made autos after trade war truce
Observers welcome trade war truce, warns against too much optimism
WASHINGTON/BEIJING: China has agreed to "reduce and remove" tariffs below the 40 per cent level that Beijing is charging on US-made vehicles, US President Donald Trump said, as a trade war truce between the two countries gathers pace.
Mr Trump and Chinese President Xi Jinping agreed to halt new tariffs during talks in Argentina on Saturday.
The US agreed not to raise tariffs further on Jan 1, while China agreed to purchase more agricultural products from US farmers immediately.
The two sides agreed to begin discussions on how to resolve issues of concern, including intellectual property protection, non-tariff trade barriers and cybertheft.
The White House also said the existing 10 per cent tariffs on US$200 billion (S$270 billion) worth of Chinese goods would be raised to 25 per cent if no deal was reached within 90 days.
On Sunday, Mr Trump tweeted: "China has agreed to reduce and remove tariffs on cars coming into China from the US. Currently the tariff is 40 per cent."
Neither country mentioned auto tariffs in their official read-outs of the meeting.
Yesterday, Mr Trump boasted that US relations have taken a "BIG leap forward" with his meeting in Argentina with President Xi Jinping.
"Very good things will happen. We are dealing from great strength, but China likewise has much to gain if and when a deal is completed. Level the field!" he said in an early morning tweet.
"My meeting in Argentina with President Xi of China was an extraordinary one. Relations with China have taken a BIG leap forward!" Trump said.
Chinese state media gave a cautious welcome yesterday to the trade war truce.
But in an editorial, the official China Daily warned that while the new "consensus" was a welcome development, there was no "magic wand" that would allow the grievances to disappear immediately.
"Given the complexity of interactions between the two economies, the rest of the world will still be holding its collective breath," it said.
Chinese shares, commodities and the yuan surged even as uncertainly remained.
Still, analysts cautioned the deal may have only bought some time for more wrangling over deeply divisive trade and policy differences and said China's economy will continue to cool regardless under the weight of weakening domestic demand.
"This is a relief rally," said Dr Paul Kitney, chief equity strategist at Daiwa Capital Markets in Hong Kong. The agreement "is just a de-escalation. The existing tariffs are still having a negative impact on the Chinese economy, they haven't gone away".
China's factory activity grew slightly last month, a private survey showed yesterday, though new export orders extended their decline.
"It is 90 days. It is nothing and it doesn't really make any difference. People have already started to reconsider their sourcing arrangements," said Mr Larry Sloven, who has been sourcing and manufacturing in China for three decades.
Chinese tabloid the Global Times, published by the ruling Communist Party's official People's Daily, warned people had to have realistic expectations.
"The Chinese public needs to keep in mind that China-US trade negotiations fluctuate. China's reform and opening-up's broad perspective recognises that the rest of the world does things differently," it said.
There are also differences in the Chinese and US accounts of what was agreed.
The White House said China was "open to approving the previously unapproved" deal for US technology company Qualcomm to acquire Netherlands-based NXP Semiconductors "should it again be presented".
The issue was not addressed by China's top diplomat in Buenos Aires on Saturday night. - REUTERS