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China has agreed to cut tariffs on U.S.-built cars and auto parts to 15 per cent from the current 40 per cent, a Trump administration official said on Tuesday, setting the stage for new talks aimed at easing the bitter trade war between the world’s two largest economies.

Washington still had not received documentation nor timing details of the tariff reduction, the official said, speaking on condition of anonymity.

China’s plan was communicated during a phone call between Chinese Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on Tuesday morning Beijing time, the official said.

News of the move, also reported by other media outlets and automotive executives briefed on the talks, boosted automakers’ shares and helped lift U.S. shares more broadly before worries about a U.S. government shutdown prompted a pullback.

Meanwhile, U.S.-China tensions over the Canadian arrest of a top executive at Chinese telecoms giant Huawei Technologies appeared to rise, as Canada confirmed that one of its citizens had been detained in China.

Canada said there was no direct link to the Huawei case, but two sources said the U.S. State Department was considering a travel warning of risks to U.S. citizens in China due to retaliation over the Huawei case.


U.S. President Donald Trump and Chinese President Xi Jinping agreed at a Dec. 1 meeting in Argentina to a truce that delayed by 90 days a planned Jan. 1 U.S. increase of tariffs to 25 per cent from 10 per cent on $200 billion worth of Chinese goods. But few details of plans for talks have emerged since then.

The two sides are expected to negotiate over U.S. demands for stronger Chinese protections for U.S. intellectual property, an end to forced technology transfers and greater market access to China for U.S. companies. Lighthizer has said March 1 is a “hard deadline” for increasing U.S. tariffs on Chinese goods if no deal can be reached by then.

Trump, without providing details, wrote in an early morning post on Twitter: “Very productive conversations going on with China! Watch for some important announcements!”

White House adviser Kellyanne Conway welcomed reports of the auto tariff cut. “It’s really great news, and I hope our friends in the auto industry see it that way as well,” she told reporters at the White House.

Officials at the U.S. Treasury and U.S. Trade Representative’s office declined to provide details of the trade call.

China’s commerce ministry said, “Both sides exchanged views on putting into effect the consensus reached by the two countries’ leaders at their meeting, and pushing forward the timetable and road map for the next stage of economic and trade consultations work.”


China had cut its global auto import tariff to 15 per cent from 25 per cent in May, but in July added on a punitive 25 per cent tariff on U.S.-produced autos in response to an initial round of U.S. tariffs on $50 billion worth of Chinese goods.

That brought Beijing’s total tariff rate on U.S. autos to 40 per cent, hitting growing U.S. exports of luxury cars and sport-utility vehicles, including those from BMW, Ford Motor Co, Mercedes and Tesla.

Daimler shares closed 2.7 per cent higher, while BMW shares rose 1.8 per cent. GM shares were up 1.4 per cent in late U.S. trading, while Ford rose 0.5 per cent and Tesla rose 1 per cent.

The Wall Street Journal, citing people familiar with the issue, said Liu planned to go to Washington after the new year. U.S. Trade Representative officials have declined to comment on plans for any new U.S.-China trade meetings.

The Harvard-educated Liu, Xi’s top economic adviser, is leading the talks on the Chinese side.

In comments reported separately by China’s Foreign Ministry, the government’s top diplomat, State Councillor Wang Yi said, “If China and the United States are antagonistic, then there are no winners, and it will hurt the whole world.”

The United States should look at China’s development in a more positive light, and constantly look to “expand the space and prospects for mutual benefit,” he told a forum.

Global financial markets have been jittery about the clash over China’s huge trade surplus with the United States and Washington’s claims that Beijing is stealing intellectual property and technology.

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