Trump tweets China to cut tax on U.S.-made cars, revs up auto stocks

Shares climb:

In early European trade on Monday, shares in Germany’s BMW, Volkswagen ASG and Mercedes-Benz parent Daimler rose between 4-7 percent.

In China, listed car dealers such as Grand Automotive , Pangda Automobile Trade and Sinomach Automobile climbed on the news, with some local carmakers falling back.

Trump and Chinese President Xi Jinping agreed to halt new tariffs during talks in Argentina on Saturday, following months of escalating tensions on trade and other issues.

After a 2-1/2 hour dinner with Xi on Saturday in Buenos Aires, Trump agreed to postpone an increase in the tariff rate on $200 billion worth of Chinese imports to 25 percent from 10 percent that was scheduled for Jan. 1. China agreed to resume purchases of some U.S. farm and energy commodities.

The two sides also agreed to negotiate in the next 90 days over “structural changes” to China’s policies on technology transfers, intellectual property protection, non-tariff barriers, cyber intrusions and theft, services and agriculture.

Major U.S. automakers said they were unaware of the lower tariffs on exports to China.

The automakers have a previously scheduled meeting with USTR on Monday, two people briefed on the matter told Reuters.

The lower tariffs would be a boost to automakers exporting vehicles to China, including Ford and German carmaker BMW, which exports U.S.-built luxury vehicles to China.

It would also be good news for Tesla that has been hit hard by increased tariffs on the electric cars it imports to China.

The U.S. firm, led by billionaire Elon Musk, has said it will cut prices to make its cars “more affordable” and absorb more of the hit from the tariffs. Tesla is also building a local plant in Shanghai to help it avoid steep tariffs.

The United States currently charges tariffs of 27.5 percent on Chinese vehicles. On Wednesday, U.S. Trade Representative Robert Lighthizer said Trump had directed him to examine all available tools to raise U.S. tariffs on Chinese vehicles to the level that China is charging.

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