Trump Says He Would Meet Xi Again, Hails China Soybean Purchases

Trump Says He Would Meet Xi Again, Hails China Soybean Purchases

We reported last week on Donald Trump's tweet that China would be slashing its tariffs on US-built vehicles, though at the time neither USA nor Chinese officials would confirm it, so we remained somewhat dubious on the subject.

The news was enough to prompt a bounce after days of losses, and MSCI's broadest index of Asia-Pacific shares outside Japan advanced 1.2 percent. It may actually matter more to foreign automakers with factories in the USA than for Ford and General Motors (GM).

Shares in vehicle companies, including BMW, rose on the reports. China's auto market is preparing its first annual sales contraction in years despite the decrease of economic growth.

Trump also said he believes China will soon cut tariffs on US autos to 15 percent from the current 40 percent level. The extra taxes meant USA auto companies like Tesla and Ford's Lincoln staring down financial losses.

China has also told state oil trader China International United Petroleum & Chemical Corp (中國國際石化聯合) to buy USA oil, and Washington is expecting Beijing to cut tariffs on US-made automobiles and parts.

Mr Trump's tweet came shortly after he agreed with Mr Xi to a truce in the trade war during a meeting at the G20 summit in Argentina. The U.S. Trade Representative's office did not immediately respond to a query about the call, according to Reuters.

The cancelation of tariffs proves to be good news for global trading markets in Europe. -China trade relations and some reassuring signs in British politics.

China is the largest buyer of USA soy, but has purchased little since Beijing slapped steep tariffs on US shipments on July 6 in retaliation for duties on Chinese goods. The United States has a long list of complaints against China on intellectual property, forced technology transfers and industrial subsidies. In its latest guidance reported by state media on Wednesday, references to "Made in China 2025" were omitted. Chinese purchases of soybeans had collapsed by more than 90% since President Donald Trump's tariffs caused Beijing to respond with tariffs of their own on United States crops. The decreased tariffs will provide a boost for auto industries on the Beijing market.

The USDA reported export sales of US corn in the week to December 6 at 903,200 tonnes for the 2018/19 crop year, below a range of trade expectations for 1.0 million to 1.5 million tonnes. Trump also canceled a Saturday news conference, citing respect for the Bush family following the death of former President George H.W. Bush. Lackluster export sales add to bearish sentiment.

Tesla's co-founder and CEO Elon Musk stated that they plan to make their electric cars more affordable for Chinese citizens. The company also plans to lessen its tariff rates by building a local factory in Shanghai.

But Phipps cautioned that while the market might stay above the 2018 lows it would likely continue to be volatile at least until a US-China negotiating deadline at the end of February.

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