China to cut auto import taxes as of July 1

The Chinese government is promising to reduce auto import duties effective July 1 following pledges to buy more U.S. goods and end restrictions on foreign ownership in the industry.

As reported by the Associated Press on Monday, President Xi Jinping promised the changes in April amid mounting pressure from Washington to narrow China’s multibillion-dollar trade surplus with the U.S.

China’s Finance Ministry said charges for many imported vehicles will be cut from 25 per cent to 15 per cent to promote development of the Chinese industry and increase availability of goods for consumers. That still would be higher than the 2.5 per cent U.S. tariff on imported autos but less than the 25 per cent charged by Washington on imported pickup trucks.

The immediate impact of the changes is expected to be limited, analysts say. Most cars sold in China by global automakers are produced in local factories, but the tariff cut could give them more flexibility in supplying additional models produced abroad. Big beneficiaries of the changes will include BMW, Mercedes-Benz, and Tesla, which are the biggest exporters of vehicles from U.S. factories to China.

China is the world’s biggest auto market by number of vehicles sold. Purchases of SUVs, sedans and minivans totalled 24.7 million units in 2017, compared with 17.2 million for the U.S., which is the second-largest market.