Trade War Watch 6: China Escalates Against Escalades

Bertel Schmitt
by Bertel Schmitt

President Obama started a trade war by slapping a 35 percent punitive tariff on imported tires as a big “Thank you” to his friends at the United Steelworkers. Most industry observers think this was mentally challenged exercise: Production of cheap tires will be shifted to other countries. Not a single US job will be created. Jobs will be lost and consumers will have to pay more.

The war is not going away. As a matter of fact, it is heating up. Not only did China lodge a formal complaint to the WTO. China has told the United States it is launching a trade investigation that could lead to new import duties on autos and sports utility vehicles made by Chrysler, Ford and General Motors, a U.S. industry official confirmed to Reuters.

The action will leave no happy faces with U.S. Commerce Secretary Gary Locke, Trade Representative Ron Kirk and Agriculture Secretary Tom Vilsack, who are in China right now for high-level talks aimed at resolving trade disputes between the two countries.


The man who started the war, President Barack Obama, will visit China in mid-November.

“The documents containing the charges were presented by China to the U.S. government this week, but have not yet been translated. Therefore we are not in a position to comment on the matter at this time,” Steve Collins, president of the American Automotive Policy Council said.

Collins estimates that the traditional Big Three U.S. automakers export about 9,000 vehicles per year to China. Total U.S. passenger car exports to China — which would also include those made by manufacturers such as BMW and Nissan — were $1.1 billion in 2008. A nice tit-for-tat. “The value of Chinese tire exports to the U.S. totaled $1.8 billion last year,” writes the Wall Street Journal, “in a market segment worth $16 billion a year.” You don’t buy our tires, we’ll escalate and you won’t sell Escalades.

In the meantime, the war threatens to veer out of control as U.S. textile, steel and some other manufacturers gather sponsors in the Senate and House of Representatives for a bill that would allow the United States to slap anti-dumping duties on goods from countries that “undervalue” their currency. Obama’s Treasury Department decided this month against formally labeling China as a currency manipulator.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • Stewart Dean Stewart Dean on Oct 30, 2009
    dwford,carm: It’s time we stopped worrying about how much consumers are PAYING for goods and time we started worrying about how much workers were EARNING from PRODUCING goods! .... We should also stop padding the pockets of investors that make companies squeeze every last penny of profit from a product produced just to raise the stock price. Actually, investors that sit around fat, dumb and happy while management games the system by gutting the corporation to artificially show fantastic profits eventually get what they deserve: a bankrupt corporation and worthless stock, ex: GM. Of course, it's pretty hard on what used to be called the rest of the stakeholders. These days management is into resource extraction: they mine corporations until the lode plays out. And even if the investors are aware, the game is rigged against their intervention. A reinvention of the capitalist model is needed.
  • Stewart Dean Stewart Dean on Oct 30, 2009

    ...and yes, even a liberal can see that the tire decision was a blatant bad payoff, just like occurs everywhere in politics on both sides of the aisle. If that's the worse O does, I'll be happy enough. It's clear that what labor *should* be doing is trying to find some way that American labor can compete in jobs that the average Joe and Jill American can fill. There's no way that either the left or the right can make water run uphill, though both sides persist in riding their pet hobby horses.

  • CoastieLenn No idea why, but nothing about a 4Runner excites me post-2004. To me, they're peak "try-hard", even above the Wrangler and Gladiator.
  • AZFelix A well earned anniversary.Can they also attend to the Mach-E?
  • Jalop1991 The intermediate shaft and right front driveshaft may not be fully engaged due to suspected improper assembly by the supplier. Over time, partial engagement can cause damage to the intermediate shaft splines. Damaged shaft splines may result in unintended vehicle movement while in Park if the parking brake is not engagedGee, my Chrysler van automatically engages the parking brake when we put it in Park. Do you mean to tell me that the idjits at Kia, and the idjit buyers, couldn't figure out wanting this in THEIR MOST EXPENSIVE VEHICLE????
  • Dukeisduke I've been waiting to see if they were going to do something special for the 60th Anniversary. I was four years old when the Mustang was introduced. I can remember that one of our neighbors bought a '65 coupe (they were all titled as '65 models, even the '64-1/2 cars), and it's the first one I can remember seeing. In the '90s I knew an older gentleman that owned a '64-1/2 model coupe with the 260 V8.
  • SCE to AUX "...the complete Mustang model lineup to peruse"Will the fake Mustang show up, too?
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