Section 301 tariffs on $200 billion of Chinese goods on List 3 to stay at 10% for 90 days
US President Donald Trump and Chinese President Xi Jinping met recently and agreed to keep the US-China trade war from escalating further over the next 90 days while they negotiate a long-term agreement.
The 90-day extension is counted from December 1st, 2018 and will expire on March 2, 2019.
The Chinese commerce ministry has responded to news about the US-China trade war "truce", saying it will begin implementing measures that the two leaders agreed to at the G20 summit.
“China will immediately implement the consensus both sides already reached on agricultural products, energy, autos and other specific items,” said Gao Feng, a commerce ministry spokesman.
Chinese and US officials will also discuss intellectual property protection, technology cooperation, market access and fair trade, with the hopes of reaching a mutual concensus. However, few details have been released on the specifics of the discussion.
The truce between the U.S. and China came after a dinner between Trump and Xi the during the G20 summit in Argentina.
According to Chinese Foreign Minister Wang Yi, the leaders agreed to pause the introduction of new tariffs and intensify their trade talks, Bloomberg reported.
“Both sides believe that the principled agreement reached between the two presidents has effectively prevented the further expansion of economic frictions between the two countries,” Wang Yi told reporters in Buenos Aires.
The US agreed that it will no longer raise the existing 10% tariffs on $200 billion of Chinese goods to 25% on January 1st, and will instead wait 90 days before making this change. The nations will also immediately begin discussions to resolve disputes over controversial Chinese trade practices: intellectual property theft, non-tariff barriers and forced technology transfer.
According to the Trump administration, China agreed to import a "very substantial" amount of agricultural and industrial goods in an effort to reduce the trade imbalance between the two countries.
Regarding automotives, Trump tweeted, "China has agreed to reduce and remove tariffs on cars coming into China from the U.S. Currently the tariff is 40%."
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
The news caused the stocks of many automakers who manufacture in the US to rise, including BMW, Daimler, General Motors, Ford, and Tesla. In July, Beijing raised tariffs on U.S. auto imports to 40 percent, which forced many carmakers to raise prices in a major hit to the roughly $10 billion worth of passenger vehicles the United States sent to China last year, CNBC reported.
Additionally, Xi said he would consider approving a possible $44 billion deal for Qualcomm Inc. to purchase NXP Semiconductors NV. China also agreed to designate fentanyl as a controlled substance, exposing its sellers to the maximum penalty under Chinese law.
China's main priority is clear: no more tariffs, but concerns remain as Chinese government officials have done little to address the major US concerns of forced technology transfer and intellectual property protection. For years, China has been promising to open its markets to foreign companies, but have failed to follow up with concrete changes. The two countries have agreed to the ceasefire due to concerns that the tariffs would hurt their economies and markets. Only time will tell if the two nations can truly overcome their divides.
We will keep following this story as it develops.