donald trump
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  • American President Donald Trump announced that China will lower or eliminate their tariffs on US car imports.
  • The US sent $10.5 billion worth of new and used cars to China in 2017.
  • The announcement comes after Trump's dinner with Chinese President Xi Jinping on Saturday at the G20.
  • The two sides announced a 90-day pause of the US-China trade war.
  • South Africa exports both finished vehicles and components to the US.

US President Donald Trump announced on Sunday that China will lower or remove tariffs on American-made cars coming into that country.

"China has agreed to reduce and remove tariffs on cars coming into China from the US," Trump tweeted. "Currently the tariff is 40%."

The move is significant as US-made cars from BMW and others are popular in China. A total of $10.5 billion worth of new and used cars were shipped to China from the US in 2017, according to the Census Bureau.

South African manufacturers of vehicle components who export to the US, alongside finished vehicle exporters to that market, had anticipated tough times as trade-war talk between the two countries ratcheted up. In 2017 South Africa exported around R4.2 billion worth of components to the United States.

See also: Trump's latest shock move threatens South African car manufacturers

The tweet comes the day after Trump's dinner with Chinese President Xi Jinping that yielded a deal to freeze the escalation of the US-China trade war and pause the imposition of tariffs between the two countries.

The Trump administration announced a 90-day détente in the trade war to give the two countries time to negotiate a broader trade deal. This means that the US will not raise the 10% tariff rate on $200 billion worth of Chinese goods to 25% on January 1, as originally scheduled.

China also committed to buying a "very substantial amount of agricultural, energy, [and] industrial" goods from the US.

While the deal is limited in scope, it was a sign of significant progress given the fact that the two countries have barely communicated since the first round of tariffs were imposed in July. A total of $360 billion worth of goods flowing between the two countries are subject to new tariffs imposed this year: $250 billion worth of Chinese goods coming into the US and $110 billion worth of US goods going to China.

The announcement that auto tariffs on US-made cars is another concrete step towards what Larry Kudlow, Trump's top economic adviser, has said is the goal of no tariffs or non-tariffs barriers between the two countries.

The tariffs were also imposed to try and force China to make changes to their economic practices, specifically the theft of US intellectual property. So far, China has been unwilling to commit to long-term changes that address the Trump administration's concerns.

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