China Lowers Imports Tariffs to Diversify Sourcing Amid Trade War with U.S.
Effective Nov. 1 China lowered its import duties on 1,585 tariff lines as part of a long-term plan to diversify sourcing away from the U.S. The move is expected to benefit suppliers such as the European Union, southeast Asia, and countries participating in China’s “One Belt, One Road” initiative.
China has responded to each stage of the Section 301 tariff increases the U.S. has imposed against imports from China with duty hikes of its own. However, this retaliation has resulted in higher costs for imports from the U.S., including key components in the supply chains for finished goods produced in China. Anticipating that these mutual tariff increases will remain in place for an extended period, Beijing has announced several rounds of duty decreases to encourage more sourcing from other countries. Affected products have included cancer-related drugs (effective May 1) and automobiles, auto parts, and some consumer goods (effective July 1).
The latest round, which took effect Nov. 1, included lowering the average duty rates for the following products as indicated.
- construction machinery, instruments, and other mechanical and electrical equipment that have substantial domestic demand from 12.2 percent to 8.8 percent
- textiles, construction materials, etc. from 11.5 percent to 8.4 percent
- resource commodities such as paper products and primary processed products from 6.6 percent to 5.4 percent
(While affected goods from the U.S. will also benefit from these changes, they also remain subject to the retaliatory duties described above.)
As a result of these and previous adjustments, China’s overall average import duty rate has been reduced from 9.8 percent in 2017 to 7.5 percent today.