China’s State Council is weighing proposals to cut import duties by about half, according to Bloomberg which cites people with direct knowledge of the matter.
According to the sources, the levy will be reduced on imported cars to 10 or 15 percent, from the current 25 percent. The move is expected to give a boost to foreign automakers, especially premium brands like BMW, Lexus and Porsche.
An announcement on the decision could be made as early as next month. China has responded to U.S. President Donald Trump’s tariff threats with similar force, although at the same time it has indicated at the loosening of its market rules.
A lower tariff would benefit premium car brands as it would make their imported cars much more competitive against locally manufactured rivals. Last week China announced it will allow foreign car companies to own more than 50 percent of their local ventures, helping them to capture a greater share of the world’s largest car market.
Cars made in the U.S. will also benefit, such as Tesla, but they may still face an additional barrier as China has threatened to impose an additional 25 percent import duty specifically on U.S.-made vehicles.