By on May 22, 2018

LaCross Avenir CHINA

China has announced plans to slash import fees on automobiles to 15 percent starting this July. While the tariff currently rides high at 25 percent, the country’s Ministry of Finance said reducing it was part of an intentional effort to open up China’s markets and spur development within the local automotive sector.

It may also have been part of a peace offering. President Donald Trump has been pretty clear on China’s trade policies with the United States, frequently referring to them as unfair. The U.S. imposes a svelte 2.5 percent fee on imported vehicles — unless we’re talking about trucks. “Does that sound like free or fair trade?” Trump tweeted last month. “No, it sounds like STUPID TRADE — going on for years!”

That posting came after the president proposed an aggressive tariff hike on metals in March, but before the two countries mutually agreed to chill out on trade threats just a few days ago.

In the interim, fears grew that Trump’s borderline antagonistic negotiation tactics would toss the country into a full-blown trade war with China. However, Chinese President Xi Jinping came forward to publicly state his intention to cut auto import taxes and improve intellectual property protections in a bid to bolster foreign exports and ease tensions. Later in April, China’s lead economic planner announced the country would ease limits on foreign ownership of automotive ventures by 2022.

The country appears to be making good on some of those promises, which is great news for high-end manufacturers hoping to sell within the country but not build there. Mainstream brands with less profit per vehicle might still have a rough go of it, however, optioning to enter or stay in China via those federally mandated joint ventures.

We would express our sympathies to brands like Buick for setting up shop there already, but it’s already cleaning up inside the nation’s borders. However, brands like Mercedes and Porsche will be totally stoked with the finance ministry’s announcement.

Parts suppliers are also in for good news, as they’ll see a reduction in import taxes. Auto parts shipped into the country endure tariffs ranging anywhere from 8 to 25 percent, but typically average around 11. The People’s Republic claim they’ll be subject to a flat 6 percent tax as of July 1st.

Bloomberg reports that tariffs on imported trucks are likely to stay at the current 20 percent — which the U.S. has no right to complain about, thanks to its chicken tax.

[Image: General Motors]

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46 Comments on “Trade War Watch: China to Reduce Import Tariffs for Cars and Components...”


  • avatar
    Charliej

    Now if the US will get rid of the chicken tax on pickups truck prices will come down and more trucks will come to the US.

    • 0 avatar
      TwoBelugas

      I’m sure California and the other CARB following states will fight tooth and nail to prevent the chicken tax from being repealed, just to prevent more trucks from being sold to the average consumer.

      • 0 avatar
        la834

        I’m not convinced eliminating the chicken tax would flood the roads with light trucks. If you don’t want want to drive a pickup truck now, I doubt that having five more (presumably foreign brand) manufacturers selling them would change your mind. Likewise – even more so actually – additional choices in cargo vans wouldn’t sway someone to buy one if that’s not what they want.

        As for the CARB states, do they really like the idea of Transit Connect vans being shipped to the U.S. with windows, seats, belts, and carpeting that immediately get removed once they pass customs in order to skirt the 25% tax? (and yes I know they’re recycled as much as possible, but recycling isn’t as environmentally sound as not needlessly making them in the first place).

        No, the real opponents of repealing the chicken tax are the U.S. automakers who want to preserve their huge sales and massive profits on F-150s and Silverados by eliminating foreign competition.

        • 0 avatar
          TwoBelugas

          “No, the real opponents of repealing the chicken tax are the U.S. automakers who want to preserve their huge sales and massive profits on F-150s and Silverados by eliminating foreign competition.”

          I guess no one is paying attention to the fact that Toyota is building US market Tacomas in Mexico as fast as it can? Current uncertainties with NAFTA aside, what has been stopping say VW from setting up shop in Mexico and build the Amarok to sell in the US? It’s not exactly an uncharted path if even Toyota is doing it.

          The reality is, even if the chicken tax is gone, federal fuel economy, crash testing, emissions, and CARB states barriers will ensure light trucks built in say Thailand will never be sold as new trucks in the US.

          • 0 avatar
            Big Al from Oz

            TwoBelugas,
            Yup, 3 Stars US for the “MAGA” Mustang in Thailand and 5 in the US.

            So, a 5 Star global Ranger would be 7 or 8 Stars in the US if that’s possible.

        • 0 avatar
          Big Al from Oz

          la834,
          Then why is the Chicken Tax there, if it’s not really needed?

          • 0 avatar
            DenverMike

            The Chicken tax counters the European Chicken tax. Only a trade agreement would kill both sides of the still ongoing EU/US trade war.

            I cannot think of another purpose for the Chicken tax.

        • 0 avatar
          DenverMike

          “…the real opponents of repealing the chicken tax are the U.S. automakers who want to preserve their huge sales and massive profits on F-150s…”

          Can you think of any worthy “foreign competition” to the F-150, etc, more so than the Tundra or Titan?

          The brain dead, knee jerk thoughts as comment are really surprising, except when from BAFO.

          • 0 avatar
            la834

            > Can you think of any worthy “foreign competition” to the F-150, etc, more so than the Tundra or Titan?

            No I can’t, which was exactly my point. It’s difficult to imagine BMW, Hyundai, or Jaguar pickup trucks plying the roads, but it was never a realistic possibility because of a big tax that has been in place since Lyndon Johnson was president. Without the tax, who knows what may have happened by now? Would VW (whose popular cargo vans and pickups based on them were the real target of the chicken tax) have expanded that early foothold into a full line of popular trucks and cargo vans by now? Would Mercedes-Benz not have wanted a piece of the van market, just as it has for decades in Europe but only recently in the U.S.? Would BMW have decided if the other Germans can sell trucks in the U.S. so can they?

            Why are full-size vans the only major category Toyota isn’t in stateside? I guess their legendary reliability wouldn’t have had much appeal to commercial van buyers. (/sarcasm)

            Had American large pickups and cargo vans had foreign competition since the mid-1960s, I doubt the Detroit three would be as dominant as they are today.

          • 0 avatar
            Big Al from Oz

            la834,
            I can think of a few pickups that are better than the aluminium wunder trux from Ford, even some globals.

            It’s odd how the rest of the world can survive without fullsize pickups and yet the US will fold according to many who comment here. Yet the US (Trump and his redneck goon economists) is complaining that it isn’t competitive.

            Don’t get me wrong, I like fullsize pickups, the one to look at is the new Ram.

            I think if imported pickups were gradually allowed to enter the US it would impact GM, Ford and Ram as they would force the Big 3 to reduce prices significantly.

            The upside is the US can have over 15 new pickups on top of what you currently have. Choice and competition breeds progress.

          • 0 avatar
            DenverMike

            la834 – Just imagine if the European Chicken Tax had never happened.. US fullsize pickups would make the Paris automotive landscape look like Horsetown Texas.

            Plus aging Econolines, Savanas, and Dodge Vans everywhere, especially in London..

            See I can be delusional too!

            How popular was the VW Type II Transporter in the US anyway? It was killed off, along with Type II Cargo and passenger vans in 1967 for entire world except Brasil production.

            Why did the VW Beatle live on? Because no Chicken tax on it?

            Except you forget something called “The Mini Truck Craze” and the Chicken Tax didn’t go away for that event, the Hot trend steamrolled right through.

            Does “demand” play any kind of role?

            So demand went away and most Mini Trucks went away. That’s how it goes, at least in the US. Did that mean Mitsu stopped building pickups completely? What about Mazda? Izusu? Did their pickups vanish from the face of The Earth? Or did life go on? Without US sales???

            The US is a very harsh environment for automakers even for Detroit based domestics. Demanding buyers, ultra cheapskates, tough emissions and safety, and of course those pesky Consumer Protection Acts.

            It’s too tough for many global cars to attempt the US market and who’s gonna cry for our beloved and missing Ladas? Our Tatas?

            Citroen, Renault, and many others tried selling here and failed for too many reasons. Or was the Chicken tax to blame here too?

            If a BMW fullsize pickup couldn’t sustain itself without US sales, maybe it’s not meant to be? Could the BMW 3-series survive without the US?

            No, show real examples, based on reality, of pickups that never happened or aborted thanks to the Chicken tax.

            And how has the Chicken tax aided the Tundra and Titan?

          • 0 avatar
            DenverMike

            @BAFO – You keep going on and on about potential “imported pickups” ad nauseam, but can you be a little less vague? These phantom pickups must haunt your dreams.

            Except the entire Mini Truck Craze had zero net effect on fullsize pickups. Why should it be different now, even if these make believe pickups flooded the US market, like what happened in the ’80s?

            Yeah they would have “pickup beds” (if they existed) but that’s where the similarities would begin and end.

    • 0 avatar
      DenverMike

      Think about the global pickups not for sale in the US. That’s a very short list, and some of those automakers may have no intention of coming to the US, minus the Chicken tax.

      So how would they impact the F-150, Silverado, Ram, Tundra, Titan, Tacoma, etc, or their prices?

      The biggest hurdle facing the trucks on your list would be US “Lemon Laws”.

  • avatar
    Master Baiter

    Not tired of winning, part 48.
    .
    .

  • avatar
    Oberkanone

    U.S.A. imposes 25% tariff on imported trucks.
    Since 1963.

  • avatar
    Oberkanone

    Ford discontinues cars. Why? The Chicken Tax
    Chrysler Dodge have no compact or midsize cars. Why? The Chicken Tax
    Protectionist tariff started in 1963 resulted in domestic auto companies over reliance on trucks to the point they are unable to compete.

    • 0 avatar
      TwoBelugas

      Sure, lets tear up all the dumb things that Lyndon Johnson signed.

      • 0 avatar
        Big Al from Oz

        TwoBelugas,
        The US needs to modernise and move with the rest of the World in trade and standards.

        Great Brittan failed to change as the “British Exceptionalist” thought that the UK way was best, even after WWII the UK still used a archaic system of money, measures and engineering. It worked, but was not competitive.

        When they joined the EU they found out it was easier to facilitate trade if you all worked in unison, enterprise like (US speak).

        The US is currently treating trade, standards, etc in a belligerent and adversarial fashion. This will only hurt the US, as the it did the UK…. and Ancient Romans.

      • 0 avatar
        "scarey"

        Lyndon Johnson- TOTAL FAILURE- Gulf of Tonkin incident (fraud), [JFK- [187] probably involved, [war on Poverty]- failure and sham, PLUS, if he had been a better President, we might not have had Nixon as President.

        • 0 avatar
          Sub-600

          LBJ pulled one of my all-time favorite political stunts while he was running for senate re-election in Texas. He was trailing his opponent in some deeply religious precincts, the man happened to have a sister who was an actress. LBJ took advantage of this by announcing at campaign rallies that his opponent’s sister was “a practicing thespian”, there would be audible sighs as the rubes shook their heads in disapproval, lol. Good stuff.

        • 0 avatar
          la834

          LBJ does have the Civil Rights Act to his credit. I can’t imagine Trump signing off on that….

          • 0 avatar
            markf

            You mean the civil rights acted passed by the Republican Congress? You should seek treatment for your Trump Derangement Syndrome

          • 0 avatar
            bd2

            @markf

            The Republicans back then were a very different party.

            LBJ signed the Civil Rights Act knowing that the Dems were going to LOSE the (white) American South for generations.

            Sure enough, Southern Dems switched parties and became Repubs.

      • 0 avatar
        28-Cars-Later

        Absolutely. Let’s dig him up and kill him again too.

  • avatar
    Russycle

    As noted, Buick is already building cars in China, they won’t be shipping any from the States. US-built vehicles can’t compete on price due to China’s lower wages, so the only imports will be prestige brands. Great news for Mercedes, Lexus, and BMW, hopefully they’ll send Trump flowers for negotiating so well on their behalf. And the flow of low-cost Chinese components for your “American” car will continue. Yay.

    • 0 avatar
      Big Al from Oz

      Russcycle,
      You must wean the Big 3 off of fullsize pickups and pickup station wagon derivatives. Whilst they are protected the Big 3 will not do any different.

      Force is needed for change, ie, adopt the UNECE vehicle standards for starters, remove CAFE, Chicken Tax and other regulatory and technical barriers that protect fullsize pickups, etc.

      • 0 avatar
        DenverMike

        @BAFO – UNECE import barriers aren’t superior to US standards. UNECE import barriers should conform to US standards, if anything.

        But in the end of day, the actual technical differences are negligible. A crumple dimple here, a turn signal there, and done.

        The Fiat 500 transforms with about detriment. Most if it is in your head.

        And of course we know what kind of clusterfuk Europe has become, in regards to auto bans, the environment, and health/cancer concerns, thanks to its vehicle regs.

      • 0 avatar
        la834

        Yes, I’ve been calling for the adoption of UNECE standards in the U.S. for years. Not only is it de facto protectionism by making it expensive for foreign manufacturers to sell cars in the U.S. (and vice versa too), it also results in more expensive and less safe cars for everyone. Imagine how much money the U.S. government could save if, say, we could not have to separately investigate safety defects because our cars were just like most of the world’s and thus we could share safety-related data between countries, have a much bigger statistical sample size, and other such advantages?

        Not to mention how U.S.-specific regulations often thwart safety-related innovations (i.e. http://www.caranddriver.com/news/high-tech-headlights-could-thwart-certain-types-of-crashes-if-we-could-get-them-in-the-u-s ). And decreased consumer choice in the U.S. is closely tied to U.S.-specific safety and pollution standards. There’s a reason you can often choose from 6 drivetrains in EU market cars that only offer one or two in the States, not to mention a vastly larger options and colors selection.

        • 0 avatar
          Big Al from Oz

          la834,
          The UNECE standards would reduce duplication by the US and force US manufacturers to build vehicles that are of export quality.

          Also, if one looks at the almost 3rd world fatality rate on US roads, I somehow don’t think US vehicles are any safer than UNECE vehicles.

          As for emissions, it seems most global standards are aligning. The US will need to use “better” fuel, especially diesel, which I think is sh!t made for central heating units.

        • 0 avatar
          DenverMike

          @la834 – Do you think it’s a coincidence UNECE “standards” zig everywhere US standards “zag”?

          UNECE regulations were modeled after US regs, but differ for no good reason, except to protect EU automakers. Then it’s the responsibility of the US to follow their protectionist regs?

          The US doesn’t protect their “domestic” automakers, not even US pickups, including the Titan, Tundra, Frontier, Ridgeline and others, when it comes down to it. There’s too many loopholes.

          When it comes to pickups, did I mention The Mini Truck Craze of the ’80s?

          Simply looking at the EU tariff on import autos, 400% higher the US tariff on imports should be your first clue.

          That’s why protected Euro cars have been among the crappiest known to mankind , and basically designed to fail, thanks to Europe’s historically thin, foreign competition.

          But when it comes down to it, Euro cars are cheap and easy to modify for US regs, and vise versa. One of the biggest difference is UNECE regs require amber rear turn signals (the US accepts either red or amber),

          yet most Euro and Japanese automakers opt change their amber turn signals to red, just for the simpler/cleaner look.

          And the US is flexible enough to allow right-hand-drive
          autos.

          So clearly you have it assbackwards.

    • 0 avatar
      bd2

      Yep, basically will have minimal impact for mainstream brands.

      A 15% tariff (mind as well be 25%)is still high enough to influence buyers, esp. combined with higher cost/wages for auto made in the US, Europe, SKorea, Canada, Japan, etc. – so the vast majority of Chinese buyers will simply opt for the still considerably cheaper made-in-China option.

      And as stated, the biggest beneficiaries will be the lux brands (on their most expensive models which are imported), the super/hyper car makers and the wealthy Chinese who can afford them.

  • avatar
    pbx

    The 10% tariff reduction applies to international auto manufacturers not just those from the US. It should be noted that meetings also yielded wins for China, with news that previously planned U.S. duties on Chinese imports, which threatened $50 billion-worth of trade, had been suspended.

  • avatar
    scarey

    But-But-But I thought that Trump is incapable of doing anything good ! Like NEGOTIATION with foreign leaders and getting a BIG TAX CUT through congress, or running the country without getting us in a war with Russia/China/North Korea/Iran/Syria. Right ?
    Maybe CNN and the other Chicken Littles were exagerating a little bit ? Or maybe they don’t want success for the U.S. .

    • 0 avatar
      Big Al from Oz

      scarey,
      I don’t think Trump has had a win here as much as the Chinese. I do believe the Chinese have been dilly dallying around with these changes.

      Where Trump and his economic goons went really wrong was to stop chips going to ZTE. This means the Chinese will now start to produce these chips and not the US.

      The US still needs to remove the 25% chicken tax.

      • 0 avatar
        DenverMike

        @BAFO – The reality is the Chicken Tax favors Toyota, Nissan, Honda, Hyundai, etc, way more than it could possible benefit Ford, GM, FCA.

        Use your head. Global pickups not for sale in the US, would mostly cannibalize offshore brands selling in the US, not just their midsize pickups (Tacoma, Frontier, Ridgeline, etc,) but also their SUVs/CUVs and others.

        But that would be painful for you.

        In fact the Ford, GM, FCA suffer the most from the Chicken tax, dealing with the import of their global vans and pickups.

    • 0 avatar
      ra_pro

      Hi didn’t hire war criminals who started the IRAQ war to appease the North Korea or Iran. He hired them to prepare for war, wake up.

      Most of the business people who supported Drumpf in trade war mongering are deeply disappointed with this. China made mostly vague promises on the issues that were the major ones and that was enough for Drumpf to declare victory.

      • 0 avatar
        Hummer

        Lol, how many wars has Trump started? How about Obama or Bush Jr? Good try but the evidence suggests otherwise.

        See unlike your friends in the establishment, Trump isn’t concerned about appeasing the big businesses that usually like to buy politicians. It must be really difficult to process being anti-big business 2 years ago to being extremely ‘pro-business – politicians should do what their overlords pay them to do’ – assuming the left didn’t change their views again in the last 20 minutes.
        China agreed to wipe 380 Billion off of their trade deficit, seems like a pretty big win overall, a start if nothing else.

        Also I do enjoy the xenophobic spelling of Trumps name, it’s fits in to the hypercritical nature of the left today.

    • 0 avatar
      bd2

      A reduction of the tariff on auto imports from 25% to 15% will have no material impact on the vast majority of Chinese buyers as they will stll purchase the cheaper made-in-China option.

      So basically helped the Germans, supercar makers and wealthy Chinese.

      Plus, China was going to do something like this anyway (more cosmetic than anything else) as their domestic auto industry has reached a certain point of maturity.

      As for the big tax cut – did recall the Bush II tax cuts stopping the greatest decline in the US economy since the Great Depression.

      This tax cut (which overwhelmingly benefits the 0.5% and big corporations) will not only balloon the deficit, but make it nearly impossible for the govt. to try to stimulate the economy the next time a major recession hits (supposed to spend during times of economic downturns and “save” during periods of growth).

      There will be a day of reckoning for this recklessness in the not too distant future.

  • avatar
    Sub-600

    Wouldn’t it be more humane to impose a free range chicken tax? An antibiotic-free free range chicken tax might even be better. No, wait…a GMO-free fed antibiotic-free free range chicken tax.

  • avatar
    Asdf

    I guess that means that Trump won’t need to raise import tariffs for Chinese cars and components to more than 15 %.

  • avatar
    gtem

    I personally would love to see a nice high tariff specifically on junk Made-in China car parts (maybe consider banning that and their sh*tty tires altogether). A pox on my (formerly) beloved Gates and even Aisin(!) for starting to put crappy Chinese bearings and tensioners into their timing belt kits.


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