Industry News: China To Back Off the 40 Percent Tariff on U.S. Built Cars Beginning Next Month

[William Maley]

China has announced today that it would be reducing tariffs on U.S.-built cars and car parts from 40 to 15 percent beginning on January 1st. This reduction will last for three months as the U.S. and China begin hashing out a new trade deal. We first reported the reduction of the tariffs earlier this week.

China's Ministry of Finance posted on their website said it hopes the talks between the two can go quickly and remove "all additional tariffs on each other’s goods" that were brought forth before the current trade-war.

“China just announced that their economy is growing much slower than anticipated because of our Trade War with them. They have just suspended U.S. Tariff Hikes. U.S. is doing very well. China wants to make a big and very comprehensive deal. It could happen, and rather soon!” President Donald Trump wrote on Twitter in response to the announcement.

China raised the tariffs on U.S.-built vehicles and parts back in July in response to the U.S. raised tariffs on Chinese-built vehicles and parts to 27.5 percent. The move caused a number of headaches for automakers which had to increase prices on models sold in China or change up various plans. Various automakers and groups welcomed the news.

At the moment, the U.S. hasn't announced any plans to reduce the 27.5 percent tariff on Chinese-built vehicles and parts.

Source: Associated Press, Reuters

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[G. David Felt]

If anyone calls this a win they are an Idiot. There is no win having a country go back to the original tariff on cars. It would have been a win if they had gone at least 5% below the original 15% tariff. 

[balthazar]

The positive take-away here is that finally there is direct focus on the imbalance issue. We had I don't know how long a years span where it was never seemingly brought to the table. We'll have to see where the trade terms end up, long-term.

[regfootball]

Since the CT6 may end up being sourced from China if it stays, it would be a direct result of what this tariff ends up as.  I also believe the future fate of a Buick Envision and Enspire depend on this. If the tariff stays low I bet we see a redesigned Envision, and an all new Enspire like the concept.

Edited December 14, 2018 by regfootball

[ocnblu]

I call it a win because NOTHING was done up to now.

[riviera74]

I need to see what else comes out of this in March.  This is at best a partial victory.

[G. David Felt]

3 hours ago, ocnblu said:

I call it a win because NOTHING was done up to now.

Not true, China went from the 15% to 40% and that killed imports of CUVs from America and other auto's. All auto companies even you hated Tesla EVs saw a rise in price, drop in importing due to this. No win as they went back to what it was before the stupid Tariff war.

How do say it is a win when costs have increased on numerous products hitting the consumer.

[daves87rs]

Either way the damage has been done...

Also would help if we imported more to them,,,,,,

[balthazar]

9 hours ago, dfelt said:

Not true, China went from the 15% to 40% and that killed imports of CUVs from America and other auto'

Have a list of cars imported INTO China from the US?

Everything I saw via Google on the topic returned privately importing a car into China or the dozens of cars imported into the US FROM China. As far I I vaguely knew, all GM cars sold in China are built there via state-mandated partnerships.

[Robert Hall]

 I've heard of US built M-B and BMW SUVs imported into China.  There may be others..

[G. David Felt]

On 12/15/2018 at 5:14 AM, balthazar said:

Have a list of cars imported INTO China from the US?

Everything I saw via Google on the topic returned privately importing a car into China or the dozens of cars imported into the US FROM China. As far I I vaguely knew, all GM cars sold in China are built there via state-mandated partnerships.

German automakers BMW Group and Daimler Group, maker of Mercedes-Benz, are the most prolific exporters of American-made vehicles to Chinese dealerships. BMW shipped 106,971 vehicles from U.S. factories to China last year, while Mercedes sent 72,198, according to LMC.

Ford Motor was the third-largest U.S.-to-China exporter with a total of 45,145 vehicles. Fiat Chrysler was fourth at 16,545 and Tesla was fifth at 14,779.

Altogether, Chinese sales of U.S.-made vehicles totaled about 266,657, representing less than 1% of the world's largest automotive market.

Here were the top 20 most exported models from U.S. plants to China in 2017:

1. BMW X5: 52,407
2. Mercedes-Benz GLE: 40,304
3. BMW X3: 34,609
4. Lincoln MKC: 17,753
5. Mercedes-Benz GLS: 17,420
6. Mercedes-Benz R-Class: 13,402
7. Ford Explorer: 12,906
8. BMW X4: 10,928
9. BMW X6: 9,027
10. Tesla Model X: 8,848
11. Jeep Grand Cherokee: 8,832
12. Toyota Sienna: 7,460
13. Ford Mustang: 7,137
14. Tesla Model S: 5,931
15. Jeep Wrangler: 5,302
16. Lincoln Continental: 4,927
17. Lincoln Navigator: 1,764
18. Jeep Cherokee: 1,697
19. Mercedes-Benz GL-Class: 1,061
20. Chevrolet Camaro: 977

Source: LMC Automotive https://lmc-auto.com/

14% auto sales drop in China this year according to LMC.

https://lmc-auto.com/global-car-sales-2018/

LMS is a paid for service so very little is shown for free, info above from comes from the USA Today Story covering how tradewar is hurting auto sales.

https://www.usatoday.com/story/money/cars/2018/04/10/chinese-auto-tariffs-xi-jinping/503470002/

Statista is currently giving some info for free on the 1.2 million auto's imported into China each year.

https://www.statista.com/statistics/244368/number-of-cars-imported-into-china/

Trade war has not been good over all for business, jobs and especially cost.

[balthazar]

As much as I'd like to shed a tear over the 9 German/foreign brands 'getting killed' in SUV sales to China, I'm dry as a bone here.

[A Horse With No Name]

On 12/14/2018 at 6:11 PM, balthazar said:

The positive take-away here is that finally there is direct focus on the imbalance issue. We had I don't know how long a years span where it was never seemingly brought to the table. We'll have to see where the trade terms end up, long-term.

Ohhh I agree completely.

16 hours ago, balthazar said:

As much as I'd like to shed a tear over the 9 German/foreign brands 'getting killed' in SUV sales to China, I'm dry as a bone here.

They have the rest of the world as a market...

[dwightlooi]

China DOES NOT BUY American built cars, period. It doesn't matter if they raise the tariff to 40,000% All US brand cars sold in China are built in China in factories which are at least 50.1% Chinese owned. For GM, it's called the SAIC -- Shanghai Automotive Industrial Corp -- where they build Chevys, Buicks and Cadillacs.

Free Trade is suicide. The USA should impose a 100% tariff on all imports from all countries with whom we have a trade deficit. Maybe we can start with 10% increasing by 5% every year until there is no longer a trade deficit with the said country. We don't mind trade without tariffs. But, trade generating deficits instead of surpluses does not benefit a country. Any country shuld be able to Trade with the USA without tariffs -- so long as they take the necessary measures and adopt the necessary policies to buy as much US exports and they sell to the USA. It's very simple as very fair. Any country who wants to sell to the USA without buying US exports will eventually see tariffs in excess of 100% in 20 years and rising. Of course this is all contrary to WTO rules, which is why the USA should withdraw from the WTO -- a wealth re-distributive organization whose membership is not in the best interest of the USA or any developed nation.

BTW, this is called Mercantilism -- aka Trade for NATIONAL profit.

Edited December 17, 2018 by dwightlooi

[A Horse With No Name]

36 minutes ago, dwightlooi said:

China DOES NOT BUY American built cars, period. It doesn't matter if they raise the tariff to 40,000% All US brand cars sold in China are built in China in factories which are at least 50.1% Chinese owned. For GM, it's called the SAIC -- Shanghai Automotive Industrial Corp -- where they build Chevys, Buicks and Cadillacs.

Free Trade is suicide. The USA should impose a 100% tariff on all imports from all countries with whom we have a trade deficit. Maybe we can start with 10% increasing by 5% every year until there is no longer a trade deficit with the said country. We don't mind trade without tariffs. But, trade generating deficits instead of surpluses does not benefit a country. Any country shuld be able to Trade with the USA without tariffs -- so long as they take the necessary measures and adopt the necessary policies to buy as much US exports and they sell to the USA. It's very simple as very fair. Any country who wants to sell to the USA without buying US exports will eventually see tariffs in excess of 100% in 20 years and rising. Of course this is all contrary to WTO rules, which is why the USA should withdraw from the WTO -- a wealth re-distributive organization whose membership is not in the best interest of the USA or any developed nation.

BTW, this is called Mercantilism -- aka Trade for NATIONAL profit.

Mercantilism was rejected by Woodrow Wilson a hundred years ago.

[dwightlooi]

36 minutes ago, A Horse With No Name said:

Mercantilism was rejected by Woodrow Wilson a hundred years ago.

Great, and we reject Woodrow Wilson and all the other morons of Free Trade.

Free Trade doesn't work, period. You can either have high wages and high standard of life, or you can have free trade. You can't have both! You CANNOT have a minimum wage, environmental rules and social safety nets -- inflating what it costs to make anything in your country -- while allowing goods made elsewhere without such nonsense to be imported and sold with no tariff or minimal tariffs! How is that supposed to work? Free Trade will only ensure that you import everything while all your workers are unemployed and on welfare.

If you want free trade you need to allow companies to pay $0.05 an hour, skip workers comp, forget health insurance and have no environmental rules. Better yet you need to allow indentured servitude (aka slavery). There is no such thing as a service economy -- you can't delivery pizzas to each other and prepare your neighbors tax return when the country makes nothing and had expended its wealth to buy everything. It's unsustainable.

[A Horse With No Name]

47 minutes ago, dwightlooi said:

Great, and we reject Woodrow Wilson and all the other morons of Free Trade.

Free Trade doesn't work, period. You can either have high wages and high standard of life, or you can have free trade. You can't have both! You CANNOT have a minimum wage, environmental rules and social safety nets -- inflating what it costs to make anything in your country -- while allowing goods made elsewhere without such nonsense to be imported and sold with no tariff or minimal tariffs! How is that supposed to work? Free Trade will only ensure that you import everything while all your workers are unemployed and on welfare.

If you want free trade you need to allow companies to pay $0.05 an hour, skip workers comp, forget health insurance and have no environmental rules. Better yet you need to allow indentured servitude (aka slavery). There is no such thing as a service economy -- you can't delivery pizzas to each other and prepare your neighbors tax return when the country makes nothing and had expended its wealth to buy everything. It's unsustainable.

Excluded middle fallacy. I reject absolute free trade just like I reject 100 percent tarrifs.

[dwightlooi]

2 hours ago, A Horse With No Name said:

Excluded middle fallacy. I reject absolute free trade just like I reject 100 percent tarrifs.

Good, now we are getting somewhere. So, what do you think the objective of tariff or the trade policy should be? Shouldn't it be to stop the outflow of wealth from your country to others (aka trade deficits) and preferably to cause wealth to flow into your country (aka a trade Surplus)? Now, if that is the objective, doesn't it make sense to tariff goods from countries you have a deficit with and impose higher tariffs on countries with whom you have a more deficits?

For anyone living in your country, they still have all the choices in the world. They can buy a US made shirt or a Chinese made shirt. The difference is that the Chinese made shirt of a comparable quality and brand value will not cost substantially less. Sure, that makes the shirt more expensive. But, think about it. If you don't do that, how is it any different from saying that we want a minimum wage, healthcare and workers comp insurance to increase the standard of living for workers, but it only applies to Company A but not Company B? Won't Company B will get all the business, while Company A go belly up and its workers all wind up on welfare! It is not different when it comes to countries and trade.

Forget everything you learned in ECON001 -- nobody gives a rat's behind about comparative and absolute advantages in man-hours when those man-hours don't cost the same amount of money!

Free Trade = Suicide

Edited December 17, 2018 by dwightlooi

[A Horse With No Name]

I think we may agree more than we disagree. I do not agree with NAFTA for example.

And yes...completely open trade is suicide. 

But I actually use a diffetent metric. I don't believe in trading at all with countries that are serious human rights abusers. If it were up to me I would end all trade with China on that ground alone.

I would also block trade completely with Israel and Saudi Arabia on the same grounds.

[dwightlooi]

On 12/17/2018 at 2:12 PM, A Horse With No Name said:

I think we may agree more than we disagree. I do not agree with NAFTA for example.

And yes...completely open trade is suicide. 

But I actually use a diffetent metric. I don't believe in trading at all with countries that are serious human rights abusers. If it were up to me I would end all trade with China on that ground alone.

I would also block trade completely with Israel and Saudi Arabia on the same grounds.

Now you are delving into Nation Building. Trade is economic policy and it should be based on economics alone. The world is full of asse holes and despots. Every year, millions suffer and die under their reigns. The only question should be whether these asse holes and despots hurt our national interests. You have two choices in the world, you can bankrupt yourself engaging in endless wars for no loot and no gain. Or, you can ally with asse holes and despots against other asse holes and despots to advance American economic and geo-political power. I'll rather do the latter.

Take the Saudi for example. Yeah, so some Saudi citizen was murdered in a Saudi Embassy by some Saudis. You cannot and will never prove who ordered it. Besides, Saudi Arabia is an Absolute Mornachy. The King and his cronnies can torture and kill you for any reason or no reason at all. The King is the law. And, it is not our jurisdiction to investigate or prosecute anyway. Now, the despotic House of Sauds may be total asse holes. But, they also buy tons of weapons from us and they serve as a US friendly check against Iranian and ISIS influence in the middle east. Why should be we value one pathetic Saudi dissident over US economic, diplomatic and military interests? Why is his life more important than the millions who die each year at the hands of other despots and asseholes? Well, it is not and I am glad Orange Man is not stupid.

Edited December 31, 2018 by dwightlooi

[A Horse With No Name]

And we will have to agree to disagree. This is going to delve into politics and get ugly....something I don't want to happen.