China cuts car import duties as it seeks deal to save ZTE

China said it would cut import duty on passenger cars in an apparent concession to the Trump administration as it seeks a deal to save ZTE from US sanctions.

The official Xinhua news service said China’s state council approved a reduction to 15% from 25% for tariffs on cars sold into China.

Beijing announced the reduction as it sought a deal to rescue ZTE from American sanctions that threatened to drive the telecoms company out of business. The US Department of Commerce will let the Chinese company resume buying US parts in return for senior management changes and a large fine, the Financial Times reported.

The Trump administration has agreed to relieve pressure on ZTE as part of a wider effort to reduce trade tensions with China after threatening to impose $150bn of tariffs on Chinese imports. The US announced sanctions against ZTE in March over allegations the company violated US export controls on Iran. China responded by saying the decision risked damaging relations between the countries.

Trump surprised markets on 14 May by ordering the commerce department to in what was seen as an unprecedented intervention in such a legal matter. The move was regarded as a concession by the US before a round of trade talks as the countries faced off amid fears of a renewed wave of protectionism.

China’s reduction to car tariffs is only a part concession because the 15% tariff remains high and the US had asked for a reduction to match its own level of 2.5%.