China confirmed it will cut tariffs on American-built cars as part of a ceasefire temporary agreement in the ongoing trade war between the two countries.
The country's Ministry of Finance said Friday that the temporary reductions will take effect on Jan. 1, 2019. China will slice the tariff from its current level of 40 percent to the 15 percent it charges for new cars imported from all other countries. A year ago, China levied a 25 percent duty on cars imported from the U.S. An ongoing dispute with the U.S. saw China first indicate it would reduce tariffs to 15 percent before ultimately boosting them considerably to 40 percent. China will also halt a 5 percent tariff it instated on nearly 70 other automotive parts.
Chinese president Xi Jinping and U.S. president Donald Trump reached the truce on the sidelines of a summit of global leaders in Argentina.
The Trump administration has not announced any plans to reduce import duties on the small number of cars built in China and exported to the U.S.
China's Ministry of Finance said in a statement that it hopes the U.S. and itself can come to an agreement over trade policies more quickly. BMW and Tesla both said Monday that they will lower the prices of U.S.-made cars such as the BMW X5 crossover SUV and Tesla Model X electric car in China, while Ford said it was "very encouraged by China's announcement."
Wang Cun, director of the China Automobile Dealers Association's import committee, said the news that China will halt tariffs on imported U.S.-built cars is a good sign that a deal may be on the horizon between the two countries.
The trade war's ceasefire will last 90 days, and if no changes happen between Jan. 1 and March 31, the higher tariffs will be reinstated. For now, 144 vehicles built in the U.S. and shipped to China will benefit from the lower tariff.