A staff member works at a service center for repairing Cadillac cars at its dealership in Beijing, China, March 14, 2016.
A staff member works at a service center for repairing Cadillac cars at its dealership in Beijing, China, March 14, 2016.

China said Tuesday it will cut tariffs on most imported cars from 25 percent to 15 percent beginning July 1.

The announcement by the country's finance ministry follows a pledge by President Xi Jinping last month to lower the import duties and to ease foreign ownership restrictions for the Chinese auto industry.

It also comes after trade talks between China and the United States and an agreement between the world's two largest economies to avoid a trade war.

U.S. President Donald Trump repeatedly mentioned the 25 percent automobile tariff as a key trade barrier, while also calling attention to the U.S. trade deficit with China.

U.S. Treasury Secretary Steven Mnuchin said Sunday the two countries "made very meaningful progress and we agreed on a framework" to resolve trade issues during recent negotiations, and that China had agreed to buy more American goods to "substantially reduce" the trade gap.

Treasury Secretary Steve Mnuchin talks with report
Treasury Secretary Steve Mnuchin talks with reporters about trade with China outside of the White House, May 21, 2018, in Washington.

China's state-run news agency Xinhua quoted Vice Premier Liu He, who led Chinese negotiators in trade talks in Washington, as saying, "The two sides reached a consensus, will not fight a trade war, and will stop increasing tariffs on each other."

Trump says the deal will benefit U.S. farmers.

"Under our potential deal with China, they will purchase from our Great American Farmers practically as much as our Farmers can produce," he said Monday on Twitter.

In another comment, he said China "has agreed to buy massive amounts of ADDITIONAL Farm/Agricultural Products - would be one of the best things to happen to our farmers in many years!"

Negotiations to continue

Liu said the agreement was a "necessity;" but, he added, "At the same time, it must be realized that unfreezing the ice cannot be done in a day; solving the structural problems of the economic and trade relations between the two countries will take time."

FILE - In this March 20, 2018, photo, Vice Premier
China's Vice Premier Liu He Liu has told U.S. Treasury Secretary Steven Mnuchin that Beijing is ready to defend its interests after President Donald Trump announced plans to slap tariffs on nearly $50 billion Chinese imports.

Trump had threatened to impose new tariffs on $150 billion worth of Chinese imports and Beijing had responded that it would do the same on American goods.

Mnuchin and White House economic adviser Larry Kudlow said U.S. Commerce Secretary Wilbur Ross would soon go to Beijing to negotiate how China might buy more American goods to reduce the U.S. trade deficit with Beijing, which last year totaled $375 billion.The United States has signaled it wants to trim the deficit by $200 billion annually, but no figure was mentioned in the agreement reached over the weekend.

Philip Levy, senior fellow on the global economy at the Chicago Council on Global Affairs, tells VOA that while the U.S. and China have for now avoided a tariff war, the outcome of the trade talks remains unclear.

"I think the Trump administration will crow about the fact that they arranged for some additional sales.That really wasn't the issue.It may have been in their minds, but in terms of what is in the national interest, it wasn't," he said.

Levy says the result is a managed trade solution that still does not answer the fundamental question of how a state-dominated economy the size of China fits into the global system.

But Kudlow said there has been a lot of progress.

"You can see where we're going next.As tariffs come down, the barriers come down, there will be more American exports," he told ABC television, saying any agreement reached will be "good for American exports and good for Chinese growth."


A ZTE Axon7 device is displayed at company's booth
FILE - A ZTE Axon7 device is displayed at company's booth during Mobile World Congress in Barcelona, Spain, Feb. 27, 2017.

One contentious point of conflict between the United States and China is the fate of ZTE, the giant Chinese technology company that has bought American-made components to build its consumer electronic devices.

The United States fined ZTE $1.2 billion last year for violating U.S. bans on trade with Iran and North Korea. ZTE, however, said recently it was shutting down its manufacturing operations because it could no longer buy the American parts after the United States imposed a seven-year ban on the sale of the components.

Trump, at the behest of Chinese President Xi Jinping, a week ago "instructed" Commerce Secretary Ross to intervene to save the company and prevent the loss of Chinese jobs.

Even so, Kudlow said, "Do not expect ZTE to get off scot free.Ain't going to happen."

(VOA's Ira Mellman contributed to the story.)