President Donald Trump announced via Twitter Monday that China has agreed to cut tariffs it imposes on American-made vehicles exported into the Asian country. The tariff reduction appears part of an agreement to halt any new taxes in the ongoing U.S.-China trade war, Reuters reported.
"China has agreed to reduce and remove tariffs on cars coming into China from the U.S. Currently the tariff is 40%" Trump tweeted.
The ongoing tariff war has left automakers scrambling to sort out strategies amid trade tensions. Chinese tariffs have affected automakers such as Ford, BMW, and Tesla, all of which build vehicles in the U.S. and export them to China where they face a 40-percent tariff upon entry.
For example, a Tesla Model S sold in the U.S. costs about $65,000 for the base 75D version. Prices for the electric sedan now hover around $128,500 for the least expensive model in China, thanks in part to the 40 percent tariff. BMW also raised the prices of its X5 and X6 luxury SUVs to combat taxes levied at the port of entry. The German brand said this past summer that both American-made vehicles would cost 6 to 7 percent more.
BMW is the largest vehicle exporter from the U.S. and recently agreed to assemble the future electric iX3 SUV in China, rather than the U.S.
On the other side, neither Trump nor the White House has commented on tariffs to be levied on Chinese-built cars imported to the U.S. Notably, General Motors and Volvo asked the current administration for an exemption on crossover SUVs and sedans built in China and shipped to the U.S. Volvo shifted production of U.S.-bound XC60s from China to Sweden while Buick has signaled that it could drop the Envision from its current lineup without a break on the tariffs.
The tariff reduction announcement comes as both Trump and China's President Xi Jinping agreed to a 90-day trade war ceasefire.