Trade War Watch: Truce Ends, Tariffs Up, Talks Resume, Trump Tweets

Matt Posky
by Matt Posky

Following an announcement that trade discussions with China had effectively broken down, President Donald Trump increased tariffs on $200 billion in goods from the country on Friday. The White House also issued an ultimatum, saying Beijing had about a month to reach an agreement before the U.S. enacts another 25-percent duty on $325 billion previously unaffected Chinese imports.

White the trade war has been in full swing for most of Trump’s time in office, the White House had indicated that discussions with China were progressing at the start of May. That changed after the People’s Republic returned a modified trade agreement that removed much of the legal language that would have made it binding while reneging on other aspects U.S. negotiators already assumed were settled. President Trump cited the backtracking as the primary reason for imposing a new round of tariffs.

Fortunately, the U.S. International Trade Commission said the tariff hike would only affect $2.3 billion worth of automotive goods — ranking them 10th on the list overall.

Limited for our purposes to motor-vehicle parts, the Trade Commission’s complete register of tariffed items included things like wheels, bumpers, shocks, door assemblies, radiators, gaskets, and seats. While this will assuredly raise the price of such components, potentially resulting in higher MSRPs, the real threat could come from retaliatory tariffs that focus specifically on American-made cars. China has made it intentionally difficult for U.S. automakers to ship vehicles by boat in the past and there’s little reason to think it will abandon that strategy now.

While China often looks like the bad guy, that’s partially the product of having the home-field advantage. China has disputed the characterization that it has reneged on its trade commitments while trying to show the U.S. as a bit of a bully — a claim that is not helped by U.S. Trade Representative Robert Lighthizer’s aggressive style. Regardless of what we think, it has created distrust on all sides.

“There’s definitely disappointment and frustration [in China]” Zhu Ning, deputy director of the National Institute of Financial Research at Tsinghua University in Beijing, said in a recent interview with Bloomberg. “We thought we were on a good path of making progress and having a deal.”

Officially, things have already turned a corner and the two countries are back to business. But the underlying animosity is palpable. “Talks with China continue in a very congenial manner — there is absolutely no need to rush,” the U.S. president said on Twitter Friday morning, before trade discussions resumed. “In the meantime we will continue to negotiate with China in the hopes that they do not again try to redo deal!”

From Bloomberg:

Treasury Secretary Steven Mnuchin described Friday’s discussions as constructive as he left the U.S. Trade Representative’s office. Chinese Vice Premier Liu He, the top negotiator who led the talks in Washington, told reporters at his hotel that the talks went “fairly well.”

Yet several people familiar with the discussions said little progress was made during a working dinner on Thursday and in Friday morning talks. Liu didn’t come prepared to offer much more in the way of concessions, one of the people said.

Liu and his delegation were expected to leave Washington on Friday afternoon, according to a person familiar with their planning.

However, U.S. officials seemed unsure whether Liu even had the authority to make formal commitments at this point. Internal debates regarding Chinese law were cited as one of the contributing factors for China’s alterations to the draft agreement. But it’s unclear whether or not those disputes have been resolved as of Friday.

[Image: Vacancylizm/Shutterstock]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Voyager Voyager on May 14, 2019

    So, your import car will become more expensive, and you already paid more for European cars, a premium. Do you expect Detroit to perform better? Trump just makes it easier for the Big Three to be even more complacent. They will probably sell more, but for many Americans they just don't bring the type of car foreign automakers do offer. Actually the very same reason why most Europeans and Asians don't crave for American cars.

  • DeadWeight DeadWeight on May 14, 2019

    THE UNITED STATES & HER ALLIES MUST LAUNCH A 1ST STRIKE ON CHINA, COMPLETELY DESTROYING ITS MILITARY CAPABILITIES AND INFRASTRUCTURE. We, along with those allies, can help China to rebuild itself into a democracy that no longer has, as its main priority, the desire to soon confront the western powers, as well as Japan, Taiwan and South Korea, in an all-out military conflict, in order to become hegemonic and export its truly warped value system on the world. My comments above all stand, and I am being proven correct, yet again, in my assessment on a major and significant topic of current times. I’m currently getting ready for a work trip out to Las Vegas, but do hope that our military is prepping comprehensive, tactically sound, and complete plans for a devastating 1ST STRIKE on China’s military forces/sites, infrastructure and political leadership. The sooner, the better, as we lose ability to achieve complete and total success in this necessary endeavor with each passing day. PROC is at least as big a threat, and likely significantly larger, given all historically proper historical economic and military adjustments, to the west and our now-Asian allies, than Nazi Germany was in the 40s. THE TIME FOR ACTION HAS ARRIVED.

    • Voyager Voyager on May 15, 2019

      You are a MASSIVE idiot, aren't you? Had your head checked lately? No tumors?

  • MaintenanceCosts It's not a Benz or a Jag / it's a 5-0 with a rag /And I don't wanna brag / but I could never be stag
  • 3-On-The-Tree Son has a 2016 Mustang GT 5.0 and I have a 2009 C6 Corvette LS3 6spd. And on paper they are pretty close.
  • 3-On-The-Tree Same as the Land Cruiser, emissions. I have a 1985 FJ60 Land Cruiser and it’s a beast off-roading.
  • CanadaCraig I would like for this anniversary special to be a bare-bones Plain-Jane model offered in Dynasty Green and Vintage Burgundy.
  • ToolGuy Ford is good at drifting all right... 😉
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