US Commerce Secretary: Beijing Reducing Auto Tariffs to Help Resolve Trade Row

Anna Jefferson
December 14, 2018

China, led by President Xi Jinping, has been accused of engaging in unfair trade practices. "However this approach is making China think twice about their hard stance", said Ernesto Ramos, Managing Director of Active equities for BMO Global Asset Management in Chicago.

The back-and-forth is the latest in a trade tow triggered by U.S. claims that China engages in "unfair" trade practices, such as theft of intellectual property.

The surcharge, implemented as part of the ongoing trade war between the United States and China, instigated by President Donald Trump, saw tariffs on us -made vehicles jump to 40 per cent in China from 15 per cent.

Trump said Bush's death put a "damper" on what he described as a "very important meeting" with Xi.

US stocks closed up on Wednesday afternoon, though well below their session highs as investors pulled back in the last few minutes of trading despite optimism about U.S. According to Iowa State University's Agricultural Policy Review, 60% of all USA soybean exports, which is a quarter of the entire crop, went to China.

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He said he would wait to increase tariffs on Chinese goods to 25 percent from 10 percent until it becomes apparent whether the United States and China can make a deal.

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In followed-up talks by phone on Monday, Beijing pledged to lower punitive tariffs on USA auto imports, resume purchases of American soybeans, and reform its 10-year economic program to allow more United States investment, according to reports.

Chinese state-owned companies bought at least $180 million of soybeans, two US traders said.

The purchases represent a major gesture by China toward easing tensions between the world's two largest economies. China's decision came amid a period of heightening tensions between the USA and China over trade and intellectual property issues. A third trader, based in Europe, said the buyers were Sinograin and Cofco and sellers included Cargill Inc, Louis Dreyfus Company and CHS Inc CHSCP.O .

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"While traders have responded positively to comments from China providing a semi-road map going forward, they are waiting for something concrete".

The USDA reported export sales of US soybeans in the week to December 6 at 792,300 tonnes for the 2018/19 crop and 3,000 for the 2019/20 crop, in line with trade expectations.

Citing industry sources, the USA soybean council said state-owned firms from China are stocking up their purchases in the product, and the shipments are expected to take place before March next year.

Another trader with direct knowledge of the deals and one who sells beans to the exporters involved said that about 30 cargoes had traded by Wednesday afternoon.

The development bodes well for Ford Motor Company and BMW, which export luxury vehicles made from the USA to China. This year, it dethroned Apple as the world's second largest smartphone maker.

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But some observers say an economic slowdown could reduce demand for crude oil next year. Benchmark New York crude was $2.11, or 4.1 percent, higher at $53.60 a barrel.

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