We reported last week on Donald Trump's tweet that China would be slashing its tariffs on US-built vehicles, though at the time neither US nor Chinese officials would confirm it, so we remained somewhat dubious on the subject. It turns out the President was right, and China is reducing its tariffs from 40 percent to just 15 percent, according to a report by the Wall Street Journal.
Chinese Vice Premier Liu He informed Treasury Secretary Steve Mnuchin and US Trade Representative Robert Lighthizer of the decision to reduce the tariffs in a phone call on Monday night, WSJ said. This move shows a willingness to negotiate with the US and could spell a cessation to the expensive and problematic trade war between the world's two largest economies.
According to the WSJ's report, Vice Premier He didn't give the US a specific date or time that China would effectively flip the switch on lower tariffs, but it's likely that it would happen soon. The tariffs on both sides of the Pacific have had a significant impact on the American automotive industry. Ford CEO Jim Hackett claims that the escalations have cost Ford upward of a billion dollars in profits.
The 15 percent Chinese tariff that will remain on US-imported vehicles is comparable to those placed on vehicles imported from other countries, according to the Office of the US Trade Representative. The US currently puts a 27.5 percent tariff on Chinese-made vehicles such as the Buick Envision and the Volvo S90. The Cadillac CT6 Hybrid is also built in China, but Cadillac is killing that model off.