China government officials have recently announced several tariff and export duty cuts that will affect approximately 1,000 products in 2019.
Tariff Changes for Imported Goods
Beginning on January 1, 2019, China began lowering or removing tariffs for 706 imports for a variety of products. This change was made to decrease the end cost for customers and stimulate the economy in China. Beginning July 1, 2019, most-favored nation tariffs were cut on nearly 300 information technology products.
The Ministry of Finance released a statement in late 2018 that it would slash export duties on nearly 100 items, beginning January 1, 2019.
History of Tariff Cuts
China made similar cuts in 2018. In May 2018, tariff cuts on 1,449 categories of goods were announced. These cuts were primarily made on the following types of goods:
- Fitness products
- Fishing products
- Mineral water
- Cleaning products
- Healthcare products
- Household appliances
- Fruit and vegetable juices
Clothing, shoes, hats, kitchenware and fitness products dropped an average of 15.9% to 7.1%.
Aquaculture products and mineral water decreased from an average of 15.5% to 6.9%.
Cosmetics, healthcare products and cleaning products dropped from an average of 8.4% to 2.9%.
Washing machines and refrigerators dropped from an average of 20.5% to 8%.
Fruit and vegetable juices dropped from 10% to 30% down to 5%.
Some jewelry types dropped from 35% to 10%.
More cuts were announced in September 2018 on 1,585 items. These items primarily included machinery, textiles, paper products and various construction materials. Some of the most significant tariff reductions included:
- Electronic equipment and industrial products reduced from a rate of 12.2% to 8.8%
- Textiles and building materials realized a reduction of 11.5% to 8.4%
- Paper reduced from 6.6% to 5.4%
Most Recent Tariffs and Duty Cuts
The first round of tariff cuts largely involved consumer goods. The next involved industrial products. The most recent tariff cuts applied to a wider variety of goods, including:
- Lithium-ion batteries
- Pharmaceutical raw materials
Additionally, tariff reductions that were temporary in nature have been extended on a number of products, including aircraft engines, natural feeds and welding robots. A complete itemization in Chinese of all of the tariff cuts are listed here.
China will also pass lower tariffs based on agreements that it has made with 23 countries and states, including the following:
- Costa Rica
- New Zealand
- South Korea
The Chinese government will eliminate or lower export duties for the following products:
- Wood pulp
- Coal tar
- Iron ore
- Chemical fertilizers
A detailed list of the export duty cuts in Chinese are described here. Additionally, China will reduce the most-favored nation tariff rates for medical diagnosis machines, printers, speakers and other information technology products. The list for these items in Chinese is listed here.
Purpose of Tariff and Export Duty Cuts in China
The most recent series of cuts is designed to stimulate the economy. Lower import tariffs reduce costs for businesses. The nation’s top economic planners met and prioritized economic objectives. Two of these were to develop a response to the nation’s economy while another was how to handle the current trade war with the United States.
In November 2018, China’s exports increased by 5.4%. However, this was a decrease of 10.1% from October 2018. Meanwhile, imports increased by 3%, which was the lowest rate since 2006.
China has placed some retaliatory tariffs on U.S. products. The new tariff cuts apply to U.S. products. However, these products are still subject to the retaliatory tariffs.
China is making other changes to try to make goods cheaper and to stimulate the economy. It has created a unified negative list and new Foreign Investment Law. Lawmakers are also considering cutting taxes and other costs in 2019. China continues its negotiation with the United States to resolve the trade war. More tariff cuts are likely to occur during 2019 to further stimulate the economy.