On Tuesday, China’s Finance Ministry said that the levy would be reduced as of July 1 from its current level of 25% that was put into place over a decade ago. Last month the government of China was reviewing several proposals to lower the levy to import vehicles to 10% of $15%.
The reduction in the import duty arrives following a truce reached between the White House administration and officials in China as they attempt to defuse the tensions between the two countries and avert a complete trade war.
While the reductions in tariffs could be called a concession to U.S. President Donald Trump and is a boon to carmakers in the U.S. like Tesla, the move is going to benefit carmakers in Asian and Europe from Toyota Motor to Daimler and shares of BMW and Jaguar Land Rover surged on the news. BMW was up over 1.5% in early Frankfurt trading, while Daimler added over 1.3%
The most recent round of easing in tariffs is part of a series of announcements in policy the past few months that are aimed at demonstrating the commitment by China of opening its economy, partly as a response to accusations of protectionism by the Trump administration.
Beijing also has pledged to cut ownership limits for the auto sector and banking. Last November the Chinese government reduced its import tariffs on nearly 200 categories of products used by consumers on a daily basis.
The car parts import duty will be lowered to 6% said the Finance Ministry.
On May 18, China announced it would be ending its anti-subsidy and anti-dumping investigation into imports of United States sorghum, saying that the public interest was a contributing factor.
President Trump has also retreated from the imposing of tariffs on Chinese goods worth billions of dollars because of discord at the White House over his trade strategy and worry about hurting the negotiations Trump is going through with North Korea.
Secretary of Treasury Steven Mnuchin on Sunday said that the White House’s plan was to impose tariffs which had been suspended and Trump on Monday tweeted that China agreed to buy a not-specified amount of farm products from the U.S.
Last year, China imported over 1.22 million autos or 4.2% of its total sales in the country of more than 28.9 million vehicles.