Trade War Watch: China to Reduce Import Tariffs for Cars and Components

Matt Posky
by Matt Posky

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]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Asdf Asdf on May 23, 2018

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

  • Gtem Gtem on May 23, 2018

    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.

  • Leonard Ostrander We own a 2017 Buick Envision built in China. It has been very reliable and meets our needs perfectly. Of course Henry Ford was a fervent anti-semite and staunch nazi sympathizer so that rules out Ford products.
  • Ravenuer I would not.
  • V8fairy Absolutely no, for the same reasons I would not have bought a German car in the late 1930's, and I am glad to see a number of other posters here share my moral scruples. Like EBFlex I try to avoid Chinese made goods as much as possible. The quality may also be iffy, but that is not my primary concern
  • Tsarcasm No, Japan only. Life costs by Rank:#1 - House (150k+)#2 - Education (30k+)#3 - Automobile (30k+) why waste hard earned money in inferior crap => Korean, Chinese, and American cars are trash. a toyota or honda will last twice as long.
  • Tassos In the 90s we hired a former PhD student and friend of mine, who 'worked' at GM "Research" labs, to come work for us as a 'temp' lecturer and get paid extra. He had no objection from GM, came during the day (around 2 PM), two hours drive round trip, plus the 1.5 hour lecture, twice weekly. (basically he goofed off two entire afternoons out of the five) He told me they gave him a different model new car every month, everything (even gas) paid. Instead of him paying parking, I told him to give me the cars and I drove them for those 90 mins, did my shopping etc. Almost ALL sucked, except the Eldo coupe with the Northstar. That was a nice engine with plenty of power (by 90s standards). One time they gave him the accursed Caddy Catera, which was as fun driving as having sex with a fish, AND to make it worse, the driver's door handle broke and my friend told me GM had to pay an arm and a leg to fix it, needed to replace almost the whole damned door!
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