China Weighs 25% Tariff Rise on Gasoline Cars Amid Trade Friction

China is contemplating increasing import tariffs on large gasoline-powered vehicles to 25%, in response to recent trade measures by the United States and the European Union. This potential move is under consideration as the country faces higher US auto import duties and possible additional tariffs from the EU, according to statements from Liu Bin, an expert at the China Automotive Technology & Research Center (CATARC).

Currently, China imposes a 15% import tariff on cars. Liu Bin, also the deputy director of the China Automotive Strategy and Policy Research Center, emphasized that the proposed tariff adjustment complies with World Trade Organization (WTO) regulations. 

"The suggested tariff rate adjustment for imported gasoline sedans and sport utility vehicles with engines larger than 2.5 liters is not only in line with WTO rules," Liu stated in an interview with the Global Times, a state-controlled newspaper. He further explained that this measure aims to balance domestic and international markets and supports China's policy push towards green and low-carbon development.

The proposed increase would predominantly impact German car manufacturers such as BMW and Mercedes, which export SUVs and sedans to China. Following the announcement, shares of BMW and Mercedes dropped by over 2%, becoming the biggest drags on the STOXX 600 index early Wednesday.

Liu highlighted that the higher duties would encourage the transition to greener automotive practices. "The recommended tariff hike would accelerate the green transition and is fundamentally different from protectionist measures elsewhere," he said.

The Chinese Chamber of Commerce to the EU confirmed these developments in a statement, noting that it had "been informed by insiders" about the possible tariff hike. The Chamber warned that such a move could have significant implications for European and US automakers.

Chinese foreign ministry spokesperson Wang Wenbin addressed the situation in a press conference, asserting that China's development and opening-up bring opportunities rather than risks to Europe and the world. He urged the European Union to avoid protectionism, which he argued would not solve the EU’s economic issues. "We also noticed that certain countries and regions have taken restrictive measures in the new-energy vehicle sector, which run counter to the green development concept and violate market economy principles and WTO rules," Liu added in his interview.