In another apparent peace offering to the US, China plans to slash its existing 25% tariff on auto imports to 15% as of July 1st, a move that the country’s Ministry of Finance calls an “important measure in further opening up.”
The announcement, made on Tuesday by the Customs Tariff Commission of China’s State Council, addresses one of the US’s largest grievances with respect to China’s trade policy. Hefty tariffs on imported cars to protect China’s domestic market, along with foreign ownership caps, forced foreign automakers to build their cars as part of joint ventures and for sale only in China.
However, there has been a considerable shift towards opening up in recent weeks. At the annual Boao Forum President Xi pledged to make the auto industry an example of China’s market liberalisation, and shortly after foreign ownership caps for some vehicles were lifted.
European car makers, such as BMW and Volkswagen, can expect to benefit the most. According to the Wall Street Journal, of the 1.2 million cars imported into China last year over 250,000 were from Germany. German brands also manufacture around 30% of their global output within China.