White House adviser expects China's tariffs on U.S. auto imports to fall to zero after the truce in trade war

As the U.S. and China have entered a 90-day truce in the current trade war, White House Economic Adviser Larry Kudlow expected that China could immediately slash its vehicle tariffs on cars imported from the U.S. He believed the immediate after action could be a rolling back of 40 per cent tariffs on U.S.-produced vehicles followed by new retaliatory tariffs it had imposed on agricultural imports.

"We expect those tariffs to fall to zero," he said in reference to the auto tariffs.

Though the 90-day clock for negotiations would start on Jan1, China had pledged to start lifting both tariff and non-tariff barriers at earliest disposal. Other than tariffs another agreement is expected on intellectual property theft.

“They are pretty close to some agreements on the IP (intellectual property) theft. And we're pretty close to agreements on the forced transfer of technology," Kudlow said.

President Donald Trump also said China had agreed to cut import tariffs on American-made cars on last Sunday. If the tariffs are reduced, it would help U.S. carmakers that were hit hard when China ramped up levies on U.S.-made cars in July as retaliatory tariffs.

"China has agreed to reduce and remove tariffs on cars coming into China from the U.S. Currently the tariff is 40%," Trump said on Twitter.

Wang Cun, director of the China Automobile Dealers Association's import committee said that if the extra 25 per cent tariff on U.S.-made cars is called off, they would see positive signs for imported cars in China.

China raised tariffs on U.S. auto imports to 40 per cent in July, forcing many carmakers to hike prices of passenger vehicles imported from the United States. This was a direct hit on U.S.-made car brands such as Tesla Inc. and Ford Motor Co.'s Lincoln as the move came immediately after Beijing slashed general auto import tariffs to 15 per cent from 25 per cent.

Trump also agreed to postpone 25% tariff rate on $200 billion worth of Chinese imports that was to be imposed from January 1. China agreed to resume purchases of some U.S. farm and energy commodities.

Major U.S. automakers are still unaware of any lower tariffs on exports to China.

It would be a breather for Tesla that has been hit hard by increased tariffs on the electric cars it imports to China. The U.S. company 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 plant in Shanghai to help it avoid steep tariffs.

The United States charges 27.5 per cent tariffs on Chinese vehicles, and U.S. Trade Representative Robert Lighthizer had been directed to examine all available tools to raise U.S. tariffs on Chinese vehicles to match China’s tariffs.