China will cut the import duty on passenger cars from 25% to 15 %. The new policy will be in effective from July 1st, further opening up a market that’s been a chief target of the U.S. in its trade fight with the world’s second-largest economy. The new policy are regarded as a signal that China will lower the trade conflicts with US.
Areduction in the import duty follows a truce between President Donald Trump’sadministration and Chinese officials as they seek to defuse tensions and avertan all-out trade war. While the levy reduction could be claimed in somequarters as a concession to Trump and will be a boon to U.S. carmakers such asTesla Inc. and Ford Motor Co., the move will also end up benefiting Europeanand Asian manufacturers from Daimler AG to Toyota Motor Corp.
Shares of Jaguar Land Rover owner Tata Motors Ltd. and BMW AG posted their biggest intraday gains in more than a monthon the news. The Finance Ministry in Beijing said later Tuesday that the stepis intended to help reduce prices and aid competition.
The import duty on car parts will be reduced to 6 percent, China’s Finance Ministry said. The shift is significant more for its optics than its potential impact given imported cars made up only about 4.2 percent of the country’s 28.9 million in automobile sales last year.
The latest round of tariff easing is part of a flurry of policy announcements in recent months aimed at demonstrating China’s commitment to opening the economy — partly in response to the accusations of protectionism leveled by the Trump administration. Beijing has also pledged to cut ownership limits in the auto sector as well as in banking, and last November reduced import tariffs on almost 200 categories of consumer products.
The policy of reducing import taxes on a wide scale will help reduce the domestic prices of imported cars and the relevant parts, and it will also help international auto manufacturers participate in the competition in the Chinese market.Therefore, this kind of policy has been welcomed by people and manufacturers. The people are generally looking forward to further measures to open up more imports of goods.