SHANGHAI/BEIJING/TOKYO – China will steeply cut import tariffs for automobiles and car parts, opening up greater access to the world’s largest auto market amid an easing of trade tensions with the United States.
Import tariffs will be cut to 15 percent from 25 percent for most vehicles from July 1, the Chinese Ministry of Finance said Tuesday, adding that the move is part of efforts to open up its markets and spur development of the local auto sector. A small number of imported trucks are currently taxed at 20 percent.
Import tariffs for auto parts would be cut to 6 percent from mostly around 10 percent, the ministry said in a statement.
The move will be a major boost to overseas carmakers, particularly premium brands such as BMW, Tesla Inc. and Mercedes-Benz, as they look to close a price gap on local rivals.
“Benefits are huge for our business, especially Infiniti,” said a Yokohama-based executive at Nissan Motor Co. referring to the firm’s premium car brand.
Another executive at the firm’s Chinese joint venture said it was “great news” but that the biggest beneficiaries would likely be German luxury carmakers, which also include Volkswagen AG’s Porsche and Audi brands.
“That’s just because of the volume of imported cars they sell,” the person said, asking not to be named.
Toyota Motor Corp. said Tuesday it would lower retail prices of its luxury Lexus brand cars exported to China. Japan’s largest carmaker by volume will decide on the level of the price cuts by the end of this month, and other automakers in Japan also welcomed Beijing’s decision to slash import duties to 15 percent from the current 25 percent. “Toyota will promptly cut the prices of exported cars and take steps so that competitive products will be offered to Chinese consumers,” said a Toyota public relations official.
Toyota exported 146,000 vehicles to China in 2017, of which around 130,000 were cars under the Lexus brand.
But the impact of the tariff cut on sales of exported cars in China may be limited, as Japanese automakers have largely shifted to local production.
Nissan sold around 1.52 million units in China in 2017 — the highest among Japanese automakers. Exports from Japan account for less than 1 percent of the firm’s total sales in China.
Honda Motor Co. has also boosted production of sedans and sport utility vehicles in China to match local preferences.
BMW said it would look at its prices and said the move was a “strong signal that China will continue to open up,” while Audi said it welcomed the “further liberalization and opening” of the Chinese market.
A Shanghai-based spokesman for Ford Motor Co. said the U.S. carmaker welcomed the new tariff policies, but declined to comment further.
China’s high tariffs on vehicles — versus a 2.5 percent U.S. levy — has been a key focus of U.S. President Donald Trump’s administration amid a simmering trade standoff between Washington and Beijing.
Trump has said the 25 percent tariff amounted to “stupid trade,” while auto industry leaders such as Tesla’s Elon Musk have said that Chinese restrictions on foreign automakers created a skewed playing field.
China and the United States, however, made a breakthrough in trade talks after negotiations in Washington last week, stepping back from the brink of a global trade war and agreeing to hold further talks to boost U.S. exports to China.