China has agreed to reduce auto tariffs on imported cars to 15 percent from 25 percent to help appease ongoing trade war tensions with the United States.
According to the China Ministry of Finance, the new import auto tariffs will go into effect on July 1. Many critics have blasted the tariff reduction, claiming minimized impact due to the lower number of imported U.S. cars into China, comprising roughly 5 percent of China?s 28.9 million automobile sales in 2017.
Plus, U.S. automakers such as Ford are already in the region, building automobiles alongside Chinese companies via joint partnerships.
“Reducing the import duty from 25 percent to 15 percent looks big on paper,” said Michael Dunne, president of China-based auto consultancy Dunne Automotive. “But the domestic auto industry will continue to enjoy considerable protection. The lower tariff might move that a few percentage points south, but that’s all. This is no breakthrough event.”
Other cut auto tariffs include auto parts from 6 percent from 10 percent, with the European Union contributing an unchanged 10 percent import tax.
Another area China looks to affect is its foreign car company ownership limit policy by 2022, which states that foreign automakers can only produce cars within its borders through a joint venture, with an ownership share equal to or less than 50 percent.