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Business Trends

China car imports hit monthly record after tariff cut

U.S.-built vehicles lose momentum as Japan and Europe accelerate shipment

Imported cars are inspected at a Qingdao port in May. A subsequent tariff cut by China has spurred imports despite escalating trade tensions with the U.S. that have led to higher levies for autos made in America.   © Reuters

BEIJING -- China's automobile imports rose to a monthly record in July after tariff cuts on vehicles coming from places other than the U.S.

The value of auto imports jumped 70% on the year to $7.3 billion, with the volume climbing 50% to about 165,000 vehicles, the country's General Administration of Customs said Wednesday.

China cut its auto import tariff on July 1 to 15% from 25% as part of broader efforts to encourage imports, indirectly addressing calls from the U.S. to take action on the bilateral trade imbalance. But only a few days later, on July 6, Beijing increased the tariff on U.S.-built vehicles to 40% in retaliation for Washington raising duties on Chinese goods. Shipments from the U.S. lost momentum while those from Japan and Europe increased notably.

Sales of Toyota Motor's Lexus luxury vehicles shipped from Japan surged, pushing the automaker's overall unit sales in China to a monthly record.

Meanwhile, California-based electric carmaker Tesla was hampered by the higher levy on U.S.-built vehicles after it was forced to raise prices in China by 20% to 30%.

Tesla had to raise prices of its electric cars by as much as 30% in China as the tariff on U.S. autos rose to 40%.   © Reuters

Germany's BMW also took a hit because it ships more vehicles to China from the U.S. than rivals. The automaker expects the Chinese levy to cost it 300 million euros ($347 million) in 2018.

Auto imports to China gained extra momentum in July because businesses curbed imports in June ahead of the tariff cut.

China lowered import levies on 1,400 products in July, spanning household goods, home appliances and apparel, in addition to autos. Overall imports from South Korea, Japan and the European Union rose 31%, 24% and 20%, respectively -- compared with an only 11% increase for U.S. goods.

With China raising tariffs on U.S. soybeans by 25 percentage points, China's soybean imports dropped 21% in July.

Meanwhile, China's exports to the U.S. climbed 11% last month despite Washington imposing a 25% additional tariff on $34 billion of Chinese goods. A robust American economy fueled demand for mobile phones, personal computers and other goods from Asia's largest economy. Businesses in China appear to have stepped up exports to the U.S. in anticipation of even more tariff increases by the U.S.

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