China’s Finance Ministry said that it will cut import tariffs on some vehicles to 15 percent, down from as much as 25 percent.
The announcement, which came Tuesday, also said that tariffs on some automotive parts would fall to 6 percent. The cuts will be effective from July 1.
The move signifies an attempt to open up the world’s largest auto market to international players. Discussion of a potential automotive sector tariff cut surfaced in April, and was mentioned in a speech by Chinese President Xi Jinping that month.
According to the Finance Ministry, the average tax on qualifying vehicles will now be 13.8 percent.
The European automotive sector was trading up just over 0.7 percent Tuesday morning, with German parts maker Schaeffler leading the way.
Higher-end car makers could stand to benefit from the decision, given that less production for these models has shifted to China. Toyota’s Lexus could do well, given it currently does not make its cars in China and has not announced any plans to move manufacturing into the country.
BMW could also gain from the tariff cut. Previous analysis had suggested that the German automaker would be hit by China’s implementation of import tariffs against the U.S. last month given that it builds a significant amount of its cars in the U.S. and then ships them to China.
Chinese car imports rose 16.8 percent year-on-year in 2017, according to state-run news agency Xinhua in February, citing the China Automobile Dealers Association. Around 1.21 million vehicles were brought into the country.