Published: Sat, May 26, 2018
Markets | By Erika Turner

China slashes auto import tariffs in boost to German automakers, Tesla

China slashes auto import tariffs in boost to German automakers, Tesla

ICTSD reporting; "Trade war fears ebb as U.S., China agree to continue talks", REUTERS, 21 May 2018; "US at odds with itself over goals of China trade talks", FINANCIAL TIMES, 21 May 2018; "US and China put trade war "on hold", THE GUARDIAN, 20 May 2018; "Chinese vice premier says China, U.S. agree not to engage in trade war", XINHUA, 20 May 2018; "Why the U.S".

USA officials deemed China's actions a violation of section 301 of the Trade Act of 1974 which authorizes the president to take any appropriate action, including retaliation, against policies of a foreign government that violate global trade agreement and restrict US commerce. He did not elaborate.

In doing so, Trump invoked a provision authorizing the president to restrict imports and impose unlimited tariffs on national security grounds, known as Section 232 of the Trade Expansion Act of 1962. It comes as the two countries work to avoid a trade war after the tough-talk and tariff escalations last month.

It was unclear what kind of structure the president had in mind. "Trade consensus between China and the US, the two major economies in the world, is welcome news to all". But it failed to commit to shrink that deficit by any specific amount. Trump has made clear that he resents Berlin's trade surplus, which amounted to 14.2 billion euros ($16.7 billion) past year for Germany's auto industry alone.

In the statement, Beijing committed to "significantly increase" its purchases of American goods and services, saying that the increase would "meet the growing consumption needs of the Chinese people and the need for high-quality economic development".

In testimony before the Senate on Tuesday, Treasury Secretary Steven Mnuchin said the administration's primary goal was safeguarding U.S. interests and denied any quid pro quo.

After boasting of the truce's benefits for farmers in tweets on Monday, Trump first indicated on Tuesday he was having second thoughts as some of his loyalists publicly criticized the agreement.

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U.S. Commerce Secretary Wilbur Ross is due to visit Beijing in early June for a further round of meetings.

"We supported Trump in the elections, support a lot of the things he stands for, and we need him to come through on trade like he promised", said Dan DiMicco, a former steel-industry executive who advised Trump during the 2016 election campaign. Beijing has also pledged to slash ownership limits in the auto sector as well as in banking, and last November reduced import tariffs on nearly 200 categories of consumer products.

Mr Trump later ordered Robert Lighthizer to seek up to an additional $US100 billion ($133 billion) in Chinese products to tax.

As part of this agreement, China would eliminate tariffs that are now placed on goods imported from the United States, including agricultural products, and begin purchasing additional farm goods from the U.S. A US delegation flew to China to extract concessions from China. Being unable to both buy valuable components nor sell its products in the United States. After threats and counter threats (including Trump's attempt to have Mexico "pay" for the border wall through NAFTA concessions), it now appears that the current round of talks will expire with no substantive changes in the NAFTA framework.

But Trump sounded an optimistic note Wednesday.

Trump says both Mexico and Canada have been "very hard to deal with" and he's "not happy with their requests".

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