The trade wars between China and USA had intensified over the past few months. However, it seems that the Chinese Government were prepared to make some sort of truce by announcing that it will reduce the tariffs on the import duties of American cars to the traditional 15% from the first week of January in 2019, for the first three months, hoping that a more cordial deal could be struck between the two governments.
This comes in wake of the meeting between President Donald Trump and the financial leader of the Chinese government, Xi Jinping in Argentina, where China agreed to temporarily let go of the additional 25% tariff that it imposed on American automobile imports in July after it got embroiled into trade wars with America. Further, China will also dismiss the 5% tariff it had levied on other automobile parts since September, making the ground even.
The tariff is not at the conventional level of 15% like it is for other countries as well. This decision, though being a temporary one, can be deemed as a genuine effort by the Chinese Government to diffuse the tensions of the ongoing Sino-US affairs and come to a decision that could be beneficial for both the countries.
It all started in April when Xi announced that the tariff will be reduced to 15% from 25% from the month of July. However, within a day, the decision got reverted and the additional import tariff was imposed. This resulted in a huge setback for companies like BMW and Mercedes and the stock market went for a perpetual toss. Reputed automakers like General Motors already have created a niche for themselves in the Chinese market and this hit affected them largely as well.
Therefore, this welcome announcement about the cutting of the tariff has been received well by all of them. Ford, another big shot in the market has applauded the decision by both the governments to come to a truce and opt for a more open-ended market which could benefit them as well as the general population.
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