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News   December 17, 2018   by Joe McDonald, The Associated Press

China suspends tariff hikes on U.S. cars, auto parts


China announced a 90-day suspension of tariff hikes on $126 billion of U.S. cars, trucks and auto parts following its cease-fire in a trade battle with Washington that threatens global economic growth.

The suspension is China’s first step in response to President Donald Trump’s Dec. 1 agreement to suspend U.S. tariff hikes for a similar 90-day period while the two sides negotiate over American complaints about Beijing’s technology policy and trade surplus.

China has indicated it plans to move ahead with the talks despite strains over the arrest of a Chinese technology executive in Canada to face possible U.S. charges related to a violation of trade sanctions on Iran.

Beijing will suspend a 25 per cent import charge on $66 billion of cars and trucks and a 5 per cent charge on $60 billion of auto parts, effective Jan. 1, the Finance Ministry announced.

The announcement helped give substance to Trump’s agreement with his Chinese counterpart, Xi Jinping, after prolonged uncertainty caused jittery global financial markets to swing wildly.

The Chinese penalties were imposed in response to Trump’s decision to slap 25 per cent tariffs on $50 billion of Chinese goods and a 10 per cent charge on another $200 billion. The second tariff was due to rise Jan. 1 until Trump agreed to the postponement.

The United States and other trading partners complain that Beijing steals or pressures companies to hand over technology in violation of its market-opening obligations. American officials also worry Chinese industry plans that call for state-led creation of global champions in robotics and other fields threaten U.S. industrial leadership.

A spokesman for China’s Commerce Ministry, Gao Feng, said the two sides were in “close contact” but gave no timetable for possible face-to-face negotiations.

Economists say 90 days probably is too little time to resolve conflicts that have bedevilled U.S.-Chinese relations for years. They say Beijing’s goal probably will be to show it is making progress so Trump extends his deadline.

Beijing officials expressed confidence China could withstand U.S. pressure but the fight battered consumer confidence and threatened export industries that support millions of jobs.

The announcement “shows the Chinese government is willing to solve trade disputes through consultation based on equality,” said Song Lifang, an economist at Renmin University in Beijing.

The tariff cut lowers the charge for U.S.-made cars and trucks to 15 per cent, the same level as imports from other countries.

“If the United States cuts or remove tariffs on Chinese goods, China will surely follow up with further relevant measures,” Song said.

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AP researcher Yu Bing in Beijing contributed to this report.


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