China announced on Tuesday that it will cut tariffs on imported passenger vehicles from 25% to 15% starting in July.
This latest announcement comes just a few days after the United States and China agreed to a ceasefire in their ongoing trade hostilities towards each other.
President Trump called out China’s high import duties on cars in April, pointing out the fact that they are much higher than the 2.5% that the US charges.
Not long afterward, Chinese President Xi Jinping announced that China would “significantly lower” their tariffs on automobiles as he claimed the country is entering “a new phase of opening up” their economy.
Porsche, a German car manufacturer under the ownership of Volkswagen, said that it “welcomes the tariff reduction policy” and will consider lowering the prices of their vehicles in China.
“Chinese customers will have the chance to enjoy an even more optimized price and pursue more personalized options when buying a car,” said a spokesman for Porsche.
Other luxury car manufacturers such as BMW and Mercedes-Benz also will stand to gain with this reduced tariff.
As for American manufacturers, GM and Ford will see less of an improvement as the majority of the cars they sell in China are already manufactured there.
Along with a cut in auto imports, China also announced a reduction in auto parts to 6%, down from the usual 8-25%.
While Trump’s hard stance against unfair trade with China was met with much criticism, so far it appears to be paying off as China continues to announce import tax reductions, including a new announcement this morning.
Just one day prior to this announcement, Senate Democratic Leader Chuck Schumer said it wasn't worth it for the US to relax it's stance on tariffs for a one-time deal. "If nothing else changes, this deal is a win-win for China."