China Lowers Trade Tariffs On Foreign Vehicles And Auto Parts

Donald Trump must be ecstatic.

The United States and China have been slowly creeping towards a trade war, which has effected the cost and availability of automobiles. Not only has China imposed a 25% tariff on foreign cars, it has also held several cars at port. The 25% tariff has effected GM, which produces the CT6 hybrid in China. The high tariffs have also greatly impacted European automakers, although the issue is about to improve. According to Reuter's Adam Jourdan, China will cut its tariffs to allow for greater access to its enormous automotive market.

Starting on July 1, 2018, the tariff will be cut from 25% to 15% for most vehicles. The Chinese Ministry of Finance said in a statement that the move is to spur development in the local auto sector. Initially, the move will mainly help premium brands such as Audi, BMW, Mercedes-Benz, and Tesla. BMW said this is a "strong signal that China will continue to open up," and Audi said it was looking forward to "further liberalization and opening" of the Chinese market. A Nissan executive also added that the "Benefits are huge for our business, especially Infiniti." The German cars will be the biggest beneficiaries, due to the sheer number of cars they sell.

The reduced tariffs will help foreign automakers compete with local Chinese automakers on price. Toyota said it would reduce prices on cars that benefited from lower tariffs in order to be more competitive. China will also reduce the tariff on auto parts from 10% down to 6%. Donald Trump has been opposed to trade tariffs with China, so this news should make him very happy. US trade talks with China will continue, with working plans to eliminate China's long-standing rules on foreign ownership of businesses.

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