China Slashes Tariffs On US Autos After Trump Tossed Preserver To ZTE

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Chris White Tech Reporter
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China promised to slash tariffs on U.S. autos shortly after the Trump administration tossed a life preserver to a Chinese telecommunications company struggling to survive an escalating tariff war.

Tariffs on American cars would be cut from 25 percent to 15 percent on July 1, China’s State Council announced Tuesday, according to the official Xinhua news service. US negotiators sought a reduction to the U.S. level of 2.5 per cent.

The move to shrink the tariff came after President Donald Trump lent Chinese telecoms group ZTE a helping hand to avoid punishment for violating American sanctions. ZTE is one of two prominent Chinese telecom companies, with the other being Huawei, that sells equipment for cellular networks.

ZTE, which employs more than 75,000 people, does business in over 160 countries. The Department of Commerce slammed the company with crippling penalties after it was caught selling products equipped with American technology to countries like North Korea and Iran, both of which the U.S. are sanctioning.

ZTE was fined $1.19 billion and pleaded guilty in federal court to sanctions violations in March 2017, one year after the Commerce Department presented evidence the company failed to abide by U.S. export control and compliance laws. ZTE was also required to punish senior leaders as part of the settlement agreement. (RELATED: China Opens Fire On Roughly $50 Billion In US Exports As Trade Spat Heats Up)

The abrupt move to detente angered hardliners like Republican Sen. Marco Rubio of Florida, who tweeted Tuesday: “If this is true, then administration has surrendered to #China on #ZTE Making changes to their board & a fine won’t stop them from spying & stealing from us. But this is too important to be over. We will begin working on vetoproof congressional action.”

Trump announced in April that the U.S. would impose tariffs on roughly $50 billion in annual Chinese exports in response to alleged Chinese intellectual property theft and forced technology transfer. The Office of the U.S. Trade Representative published a list of around 1,300 Chinese products expected to be subject to the new tariffs. (RELATED: China’s President Promises ‘Significantly Lower’ Auto Tariffs)

China retaliated against the president’s steel and aluminum tariffs with tariffs on around $3 billion in U.S. exports to China. Beijing has repeatedly stated that it will hit back in a trade war, stressing that China’s response will be of the same scale and intensity.

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