The last thing Beijing needs at this time is a trade war

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The Ministry of Finance in China will be reducing its auto import tariff rates from 25% to 15% by July 1 in order to boost investment in the Chinese automotive industry, according to Autocar. The European Union, by comparison, has a 10 percent levy on foreign-made cars entering its borders.

President Trump on Tuesday said he was not happy about the progress of trade talks with China - but also suggested that the USA would likely cut a deal to keep Chinese telecommunications giant ZTE in business. But it may be tougher for the make a national security case with a consumer product such as cars, than it did with steel and aluminum, two materials used in military equipment.

Shares of Jaguar Land Rover owner Tata Motors Ltd. and BMW AG posted their biggest intraday gains in more than a month on the news. BMW (BMWYY) and Fiat Chrysler rose 1.25%. Daimler added as much as 1.3%.

But the agreement - which contained no specifics - drew fire from those who had supported Trump's campaign pledge to crack down on what they call China's abusive commercial trade practices. The cut in Chinese auto import tariffs could help Tesla, which has been looking to break into the Chinese market.

It also ended the temporary calm between the US and China, which in contrast to Washington's actions announced on Thursday it will reduce import duties on a range of consumer goods in a bid to open its market to outsiders. That move, coupled with recent steps including restarting a review of Qualcomm's application to acquire NXP Semiconductors (nxpi), signal a conciliatory stance from the Chinese side.

This comes after President Trump announced trade barriers and tariffs with China will come down for the first time as the administration promises to hold off on new import taxes for the time being.

The U.S. levies a 2.5 percent duty on imported passenger cars and a 25 percent tariff on pickup trucks from countries that are not parties to free trade agreements with it. In auto parts exports to the U.S., China was ranked second previous year. Still, in the latest Quinnipiac poll last month, Trump's job approval rating stood at 41 per cent, matching the highest mark of his presidency. China's gargantuan $375 billion annual trade surplus with the U.S., according to U.S. Census Bureau figures for 2017, is responsible for almost half of America's total trade deficit and is by far the largest such bi-lateral figure in the world.

German luxury carmakers and German manufacturers of high-technology brakes could also be winners. Mnuchin later confirmed to lawmakers that the decision does not affect a separate set of steel and aluminium tariffs that the U.S. has imposed on most countries, including China.

For Tesla, a tariff cut will provide a boon until the company manages to set up local production. "The real evidence is that America's Big Three vehicle markers became less competitive as an oligopoly, and foreign imports forced them to shape up and make better cars". It came after he tweeted earlier in the day that there will be "big news coming soon" for auto workers.

China's move to ease controls on its auto market reflects growing official confidence in fledgling Chinese automakers and a desire to make the industry more flexible as Beijing promotes development of electric cars.

The joint statement has only alluded to what many believe is the real problem: The American belief that China is using state-owned companies to promote the forced transfer of technology and cyber espionage to undermine the USA technological lead.



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