Shares in some of the world’s biggest carmakers have enjoyed a bright start to the week.
That’s after the U.S. and China agreed on a truce in a damaging trade war.
One key beneficiary: automakers who export and import vehicles to and from the world’s two biggest economies.
Their weekend dinner at the G20 summit in Argentina produced a trade war truce between Chinese President Xi Jinping and U.S. President Donald Trump, followed by a very valuable digestif.
The U.S. President tweeted on Monday that “relations with China have taken a big leap forward” after Beijing agreed to cut the 40 percent import tariff on American-made cars.
My meeting in Argentina with President Xi of China was an extraordinary one. Relations with China have taken a BIG leap forward! Very good things will happen. We are dealing from great strength, but China likewise has much to gain if and when a deal is completed. Level the field!
— Donald J. Trump (@realDonaldTrump) December 3, 2018
The Chinese government has yet to confirm this.
But it was enough to send shares in European carmakers such as BMW – who make cars in the U.S. to sell in China – up, along with major stock markets.
Robert Halver, Head of Capital Market Analysis, Baader Bank AG, said: “Even though we are still far from a reasonable and final compromise, we at least have a truce for a few weeks and months, which is of enormous help to the markets.”
Under their 90-day truce the U.S. will postpone ramping up tariffs on $200 billion of Chinese imports to 25 percent—they were scheduled to take effect on January 1st.
Beijing has agreed to buy more agricultural and energy commodities.
The two sides will discuss some of the allegations Washington has leveled at China, including alleged intellectual property theft, cyber security and unfair trade practices.
Beijing has denied these charges, but welcomed the progress made at the G20.
“In the next step, the two sides will seize the time to speed up consultations in line with the consensus reached by the two heads of states and strive to bring the bilateral trade relations back to the normal track and realize win-win cooperation,” Geng Shuang, spokesman for the Chinese Ministry of Foreign Affairs, told a news conference.
And while no timetable has been set for those negotiations, the White House says it will move quickly, with the clock ticking on this truce.
Dave Salmonsen on last weekend’s US-China trade agreement
CGTN’s Mike Walter spoke with Dave Salmonsen, senior director of Congressional Relations at the American Farm Bureau Federation, on last weekend’s U.S.-China trade agreement.