Motor vehicle tariff

The tariff rate for imported motor vehicles is projected to remain at 5.0% over 2024. Rates are imposed by government legislation and are generally set years in advance. This rate applies to imports from all nations, except those for which a free trade agreement (FTA) is in effect. FTAs with Japan and South Korea, both of which were confirmed in 2014, came into effect through the Korea-Australia Free Trade Agreement and the Japan-Australia Economic Partnership Agreement on 12 December 2014 and 15 January 2015 respectively. The Australia-India Economic Cooperation and Trade Agreement entered into force on 29 December 2022 and an FTA with the United Kingdom came into effect on 31 May 2023. These FTAs reduced the tariff to zero on a range of imported passenger vehicles from these nations. FTAs with a range of other nations such as Thailand and the United States also reduce the overall effect of the motor vehicle tariff rate. Australia's major sources of imported motor vehicles include Japan, Thailand, the United States and South Korea. Furthermore, tariffs on electric vehicles, plug-in hybrid vehicles and hydrogen fuel-cell vehicles were eliminated on 1 July 2022.

The motor vehicle tariff has dropped dramatically since it was set at 57.5% in the early 1980s, in response to competition reforms and a trend towards market liberalisation. The tariff was steady at 10.0% from 2005 through 2009 but was halved to 5.0% in 2010. This brought the rate of import tax for motor vehicles in line with the general tariff rate of the broader manufacturing sector. The long-term decline in the motor vehicle tariff has had an adverse effect on local motor vehicle manufacturers. Manufacturers in countries like Japan, South Korea and Thailand benefit from greater economies of scale by supplying a higher volume of vehicles to the global market, while also benefiting from lower wage costs. The lack of tariff protection has negatively affected local motor vehicle manufacturers. Ford ceased domestic production in October 2016, while Toyota and GM Holden both closed their local manufacturing operations in October 2017. Overall, the tariff rate for imported motor vehicles has remained unchanged over the past five years.