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China moving to slash tariffs on U.S. autos, as Trump tweet predicted

Trump says he has ‘incredible relationship’ with Xi
WATCH: Trump says he has 'incredible relationship' with Chinese President Xi Jinping

Automakers’ shares rose on Tuesday following a report that China could move to cut tariffs on American-made cars, a step which was forecast by U.S. President Donald Trump after a meeting with China’s president in Argentina.

READ MORE: Trump calls Xi meeting ‘extraordinary,’ says China has much to gain in post-G20 tweet

China is moving to cut import tariffs on American-made cars to 15 per cent from the current 40 per cent, Bloomberg reported on Tuesday citing people familiar with the matter.

The step hasn’t been finalized and could still change, according to the report.

Shares of U.S. automakers including General Motors and Ford Motor rose about 2 percent in premarket trading on hopes that the move could revitalize sales that took a hit when China ramped up levies on U.S.-made cars.

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European auto stocks also rallied 2.8 per cent on the news, as several of the carmakers build SUVs in the United States and sell in China.

BMW , Volkswagen and Daimler rose between 2.3 per cent and 4 percent.

WATCH: German carmaker BMW hikes prices in China due to rising tariffs 

BMW lifts prices in China on U.S.-made SUVs to combat tariffs
BMW lifts prices in China on U.S.-made SUVs to combat tariffs

A proposal to reduce tariffs on cars made in the U.S. to 15 per cent has been submitted to China’s Cabinet to be reviewed in the coming days, according to the report.

Beijing had raised tariffs on U.S. auto imports to 40 per cent in July, forcing many carmakers to hike prices.

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The news would also be beneficial for Tesla that has been hit hard by increased tariffs on the electric cars it exports to China.

The U.S. firm, led by billionaire Elon Musk, has said it will cut prices to make its cars “more affordable” and absorb more of the hit from the tariffs. Tesla is also building a local plant in Shanghai to help it avoid steep tariffs.

“China has agreed to reduce and remove tariffs on cars coming into China from the U.S. Currently the tariff is 40 per cent,” Trump had tweeted last week.