Trump’s Trade Push Gets Big Early Win As Import Tariffs On Auto Reduced By China

Reduction in import tariffs on automobiles was announced by China on Tuesday. The decision of the authorities of the largest car market in the world is being viewed as a measure to placate U.S. president Donald Trump in his efforts of reducing the trade deficit that U.S. has with China.

The current rate of import tariffs of 25% would be reduced drastically to around 13.8% by China and at the same time, it will also reduce the levy on imported car parts from the current 10% to 6%. This will help to further open up the market to foreign auto companies and make them more competitive in the market. the Ministry said in a statement that the new rates would become effective on July 1.

According to reports by Volkswagen, in the first three months of the current year, over 40% of the total number of vehicles that it sold globally were sold in China. BMW sold about 18% of its total global sale in the Chinese market.

It has been just days that the officials from the U.S. and China have agreed to reduce the trade deficit of the U.S. with China significantly. The U.S. trade deficit with China last year was a record $375 billion. the decision was arrived at a weekend summit between the world’s two biggest economies.

The issue of reducing import tariffs on auto was raised by China’s President, Xi Jinping, earlier this year following his meeting with Trump.

In another big announcement for the global auto industry, China had announced earlier this month that it would relax the regulations for requirement for foreign auto companies of having to get into joint ventures with domestic companies to enter the Chinese market over the next five years.

The comparative tariff rates on import of car in the two countries is quite significant. A car being exported from China to U.S. attracts a tax of 2 1/2%. But when a car is exported to China from the U.S., it has to cough up an additional 25% in tariffs.

According to Census Bureau data, last year, about $10,5 billion was the total worth of the cars that the United States sold in the Chinese market. However, the country only imported $1.5 billion in reciprocal goods even with a tariff rate of just 2.5% tariff on imported cars and parts. There has bene a slow-down in the growth rate in the Chinese car market. the growth in the first quarter was 2.8% as per the data available from the China Association of Automobile Manufacturers. The organization predicts that there would only be a growth of 3% this year compared to the growth rate of 13.7% pace recorded in 2017

(Adapted from


Categories: Economy & Finance, Strategy, Sustainability

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