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China and the US have reached a small truce in the trade war. China recently announced that it will reduce tariffs on US cars from 40% to 15%.
Chinese Vice Premier, Liu He, reached the agreement with US Treasury Secretary, Steven Mnuchin, and US Trade Representative, Robert Lighthizer. The treaty has helped to restart the stalled trade talks between China and the US.
China and US agree on auto deal
The agreement reverses the tariffs China imposed on US auto imports in July. The carmakers raised prices to offset the tax increases. Chinese vehicle sales are down to its lowest levels in seven years and imported automobiles are popular. This thawing of the icy trade deal between the two nations will bring a large benefit to US automakers.
‘If they cancel the extra 25% tariff on US-made cars, then we will see positive signs for imported cars,' said Wang Cun, director of the China Automobile Dealers Association’s import committee.
US President Donald Trump touted this deal being reached at the G20 summit in Buenos Aires earlier this month.
‘China has agreed to reduce and remove tariffs on cars coming into China from the US. Currently the tariff is 40%,’ tweeted Trump.
How US automakers can benefit from tax cut
Shares of US carmakers like Ford and General Motors are already climbing after the news of the Chinese tariff reduction. Not only could the sales of the imported automobiles increase in China, but this could hopefully continue trade talks between the US and China so both countries can benefit.