China has announced that it will be temporarily reducing tariffs on U.S. automobiles down to previous levels. However, these tariffs would return if a deal with the U.S. is not reached.
Here's what we know
In July, China had a 15 percent tariff on U.S. auto imports, a reduction from an earlier tariff of 25 percent. After President Donald Trump imposed tariffs on imports to the U.S. from China, China increased its tariffs on the import of automobiles from the U.S. to 40 percent.
On Friday, the Chinese Finance Ministry released a statement announcing that it would reduce its auto tariffs back down to 15 percent. It said that the new move was intended to help facilitate a “mutually beneficial new Sino-US trade order."
This tariff reduction will continue for three months, beginning on Jan. 1. If a deal is not reached by the end of this deadline, the tariffs would go back into effect.
BMW estimates that the cost of Chinese tariffs on its cars in 2018 will add up to around $338 million by the end of the year, according to Reuters.
China also promised to buy 1.13 million metric tonnes of soybeans from the U.S. However, USDA Deputy Secretary Steve Censky noted that while this was “a great step," “there needs to be a lot more as well, especially if you consider it in a normal, typical year, we'll be selling 30 to 35 million metric tonnes to China."
In October, the American Farm Bureau Foundation reported that, according to USDA data, U.S. exports of soybeans had dropped by 97 percent in 2018 compared to the previous year. For the month of September alone, in 2017 the U.S. exported $1.1 billion in soybeans to China, but in 2018 it exported only $24 million.
This drop in exports resulted in a drop in the price of U.S. soybeans, which forced some U.S. soybean exporters to turn to sell their merchandise to Iran at a discount.