China will suspend additional tariffs on United States made vehicles and auto parts for three months starting Jan. 1, 2019, the finance ministry country said on Friday, following a truce in a trade war between the world’s two largest economies.
The Ministry of Finance, in a statement on its website, also said it hopes China and the United States can speed up negotiations to remove all additional tariffs on each other’s goods.
“This is a good signal that China and the United States are on track to solve the trade war,” said Wang Cun, director of the China Automobile Dealers Association’s import committee. “Car makers might be ordering a large number of imported cars now.”
Shortly after the Chinese finance ministry’s announcement, Tesla Inc (TSLA.O) said it had cut prices on its Model S and Model X vehicles in China.
Joe Hinrichs, president of Ford Motor Co’s (F.N) Americas unit, also welcomed China’s announcement, noting that the U.S. automaker exported nearly 50,000 U.S.-built vehicles to the country in 2017.
“As a leading exporter of vehicles from the U.S., we are very encouraged by China’s announcement today,” Hinrichs said. “We applaud both governments for working together constructively to reduce trade barriers and open markets.”
Auto exports between the two countries are however relatively small. China exported 53,300 vehicles to the U.S. market last year and imported 280,208 U.S. manufactured vehicles, according to data from the China Automotive Technology and Research Center (CATARC), a government-affiliated think-tank.
In contrast, in the first 11 months of this year, China produced 25.3 million cars, down 2.6 percent from the same period last year, industry figures showed.
Wang said car makers in China that imported cars from the United States had seen a 30 percent decline in volume in the first ten months of the 2018, but the tariff cut would bring imports back to previous levels.