China cuts tariffs on cars, car parts

China will dramatically reduce its tariffs on imported autos to 15% from 25%, and will also cut its import tariff on auto parts to 6% from a range of 8% to 25%, the Chinese government said on Tuesday. The reduction will be effective July 1.

The announcement comes as high-level trade negotiations are ongoing between the U.S and China, in order to avert a trade war. The auto sector has been an important focus of the talks.

China’s Ministry of Finance said in a statement that the reduction of tariffs was an “important measure in further opening up” the Chinese economy.

In April, China announced plans to allow full foreign ownership of automakers in five years, ending restrictions that has contributed to strained relations with its trading partners.

Concerns of a trade war between the U.S. and China have underpinned markets for weeks, but on the weekend fears were alleviated after U.S. Treasury Secretary Steven Mnuchin said the trade war was “on hold.” U.S. markets reacted by rallying on Monday.