New Tariff, Export Duty Cuts in China for 2019 – Wide Variety of Products Affected

Posted by Written by Alexander Chipman Koty Reading Time: 2 minutes

China announced a wide variety of tariff and export duty cuts for businesses in 2019.

China will lower or remove tariffs for imports on 706 types of products, beginning January 1, 2019, in a bid to lower costs for consumers and further open the country’s economy.

According to a statement by the Ministry of Finance released on December 24, China will also slash export duties on 94 items from January 1, and cut most-favored nation (MFN) tariffs on 298 information technology products beginning July 1, 2019.

The move represents China’s third round of tariff cuts in 2018. China announced tariff cuts on 1,449 categories of goods in May and cuts on a further 1,585 items in September.

Products affected by the tariff, duty cuts

While China’s first two rounds of tariff cuts primarily targeted consumer goods and industrial products, respectively, the latest round affects a wide variety of goods.

China will cut tariffs for products including lithium-ion batteries, cotton, fur, and some pharmaceutical raw materials, and extend temporary tariff reductions on products such as aircraft engines, welding robots, and natural feeds. The complete list of tariff cuts can be found here.

Further, China will enact lower conventional tariff rates pursuant to previously agreed upon trade deals with 23 countries and territories, including New Zealand, Peru, Costa Rica, Switzerland, Iceland, South Korea, Australia, and Georgia.

Meanwhile, export duties will be lowered or removed for chemical fertilizers, apatite, iron ore, slag, coal tar, wood pulp, and more. The complete list of export duty cuts can be found here.

From July 1, 2019, China will also reduce the most-favored nation tariff rates for 298 information technology products, including medical diagnosis machines, speakers, and printers. A further 14 information technology products will have their tariff rates provisionally lowered on that date. The complete list of affected products can be found here.

Cuts designed to stimulate consumption

The latest round of tariff cuts were announced shortly after China’s top economic planners convened for the annual Central Economic Work Conference, where economic priorities for the following year are formulated. At the top of the agenda was developing a response to China’s slowing economy and ongoing trade war with the US.

In November, China’s exports grew by 5.4 percent year-on-year – 10.1 percentages points lower than the month before – while imports grew by three percent, the weakest mark since 2006. Amid the trade friction and economic uncertainty, lower import tariffs will help reduce costs for businesses.

For example, China’s retaliatory tariffs on US soybeans has forced the country to seek alternative trade partners – but at a higher price. By reducing tariffs on meals like canola and sunflower, China can at least partly offset the higher costs for soybeans that are used for animal feed. The tariff cuts will also apply to US products, but they will still be subject to additional retaliatory tariffs where applicable.

The announcement also coincides with a new draft Foreign Investment Law and unified negative list, as well as promises from China’s top leaders to cut taxes and other costs in 2019. As China continues to negotiate with the US on a resolution to the trade war, China’s leadership will be keen to promote these measures as evidence of their commitment to opening up the world’s second largest economy.

Given the recent pledges to further cut taxes in 2019 – as well as the pressures facing the economy – more tariff cuts appear likely to occur in the new year.

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