Tag: Trade War

By on June 6, 2019

China has fined Ford Motor Company’s main joint venture in the country, Changan Ford Automobile Co., over antitrust violations. However, the more likely scenario is that the People’s Republic is trying to flex some muscle after the Trump administration declared a ban on doing business with Huawei, the world’s largest telecommunications provider, on national security grounds.

The oversimplified gist of the situation is that America doesn’t trust a telecom firm with direct ties to the Chinese Communist Party that could easily be tapped by the Chinese government for espionage. Several countries banned Huawei equipment earlier this year after the U.S. Justice Department unsealed a raft of indictments, included 23 counts pertaining to the alleged theft of intellectual property, obstruction of justice, and fraud relating to sanctions against Iran.  (Read More…)

By on May 21, 2019

While it’s difficult to muster sympathy for giant corporations, the trade war current raging between the United States and China has left many stuck in an industrial limbo. Automakers want a bigger slice of the global market, but putting your eggs in either country’s basket will result in repercussions from the other.

We’re not saying this to promote some kind of commiseration for multinational companies; rather, it’s simply to remind everyone of how the auto industry has to conduct its business. Frequently, carmakers must play both sides. Toyota, already one of the world’s largest automakers, knows this better than anyone, and new documents shed light on some of the cloak-and-dagger aspects of maintaining its high-volume position.  (Read More…)

By on December 14, 2018

China announced Friday its intent to reduce tariffs on imports of American-made cars as it tries to negotiate a trade deal with the United States. As you’ll recall, the People’s Republic imposed additional punitive tariffs on U.S. cars and auto parts earlier this year after promising it would lower the trade barriers on a global scale.

Things look to be different this time around. China has already taken steps to scale back the trade war and appears ready to continue down that path. Earlier this month, President Donald Trump and Chinese President Xi Jinping agreed to a truce in the trade war at their meeting in Argentina. This was followed by an announcement, via Trump’s Twitter account, claiming China had agreed to scale back auto tariffs against the United States(Read More…)

By on December 3, 2018

Trump

Last night President Donald Trump tweeted that China had agreed to reduce tariffs. While The People’s Republic already lowered tariffs over the summer, it chose to cut the United States out of that deal as trade relations worsened. In fact, America found itself subject to an increased, 40-percent fine on imported autos while the rest of the world saw their tariffs (partially) eased. But the president seems optimistic.

“My meeting in Argentina with President Xi of China was an extraordinary one,” Trump explained in a follow-up post. “Relations with China have taken a BIG leap forward! Very good things will happen. We are dealing from great strength, but China likewise has much to gain if and when a deal is completed. Level the field!”

Meanwhile, China remains silent on the matter.  (Read More…)

By on November 1, 2018

Nissan Leaf 2018 factory

On Wednesday, we reported General Motors’ plan to buy out salaried employees as part of a long-term cost-cutting strategy, with further reductions in headcount looking likely. Despite its healthy profits, GM knows industry forecasters predict a period of economic hardship and continuously dwindling car sales. OEMs need as much money as they can cling to in order to weather the costs associated with advancing their collective shift into electrification and autonomous vehicles, while at the same time preparing for a global trade war.

A bad moon is rising and every manufacturer needs a way to cope.  (Read More…)

By on October 11, 2018

BMW logo emblem badge

Now that China has relaxed its joint-ownership mandates, BMW has announced that it will procure a majority stake in its venture with Brilliance Automotive. The German firm will be the first foreign automaker to have majority control of its business in the region.

Being first will not come cheaply, however. It will cost BMW $4.2 billion to assume control with a majority stake of 75 percent of the business — albeit as part of a larger deal. All the manufacturer has to do is come up with the funds and wait until 2022, when rules limiting foreign ownership for all Chinese auto ventures are officially lifted.  (Read More…)

By on August 15, 2018

In Joseph Conrad’s Heart of Darkness, Kurtz has an epiphany regarding himself, imperial conquest, and war as a whole, crying “The horror! The horror!” in his last moments of life. His experiences took him from a well-meaning businessman to a megalomaniacal warlord, only able to realize the full scope of his own corruption upon his death. Trade wars contain significantly less drama than real ones, but there is never a shortage of egotistical individuals falling down a rabbit hole of madness.

This week, a decree signed by Turkish President Recep Tayyip Erdogan raised the tariff on U.S. cars to 120 percent. While this doesn’t qualify as truly horrific, it certainly could head in that direction if things continue to escalate.  (Read More…)

By on June 2, 2018

BMW Spartanburg Assembly Plant Factory

As nations continue plotting how to best stab each other in the back in the wake the United States’ decision to impose steeper tariffs on aluminum and steel, manufacturers have to find a way to roll with the punches. Domestic BMW dealers have begun crapping their designer britches over fears that 3 Series models will suddenly host MSRPs in excess of $60,000 if the Trump administration follows through with a threat to impose high import duties on cars.

While we don’t know if the 25 percent import tariff on cars will come to pass, we do know the very real steel tariffs will shrink the profit margin of many vehicles. However, BMW is one of the first automakers we’ve heard discussing the purchase of more U.S. steel to mitigate costs. (Read More…)

By on June 23, 2013
Ford Setagaya Dori

Open: The Ford dealer down the road from me. Go there yourself.

Last week, I had a few very interesting discussions with a few very famous people, and I should not keep them to myself. The discussions were about one of my pet peeves, the supposedly closed Japanese car market, and the allegedly manipulated Japanese currency. Some very knowledgeable people I talked to were convinced it’s true. Other very knowledgeable folks said it’s utter baloney. In a rare display of balanced reporting, I will bring you both. And as they say, we purport, you decide.

(Read More…)

By on June 12, 2013

Dieter Zetsche - Picture courtesy l1.yimg.com

In a bout of severe wishful thinking,  Daimler CEO Dieter Zetsche told Reuters  that “Daimler does not expect the current spat between the European Union and China will escalate to include cars,”

(Read More…)

By on December 15, 2011

When we last checked in on the low-level trade war between China and the US, which was sparked by President Obama’s 35% tariff on Chinese tires, the Chinese government had ruled that American large cars and SUVs were being “dumped” on the Chinese market, but wasn’t doing anything about it. Now, Reuters reports that China is doing something about it, namely saying that it plans to impose tariffs of up to 22% on imports of American-built large cars and SUVs. And the “up to” is key: GM and Chrysler are being hit hardest (unsurprisingly), while American-made BMW, Mercedes and Acuras are receiving considerably lower tariffs.

Still, China only imports $1.1b worth of vehicles in this category, whereas the US imported some $1.8b worth of Chinese tires prior to the Obama tariffs.  Like most of the news around Chinese-American relations, this is more saber-rattling than substance. But with economic conditions still shaky in the US, and a Presidential election getting into full swing, small spats can escalate into larger confrontations. And with China surpassing the US as the largest market for cars in the world, it’s probably no coincidence that this simmering conflict largely involves cars and car-related products.

By on April 4, 2011

The trade war that erupted between the US and China late last summer may have cooled to an angry simmer, but its effects are once again being noticed in the automotive industry. After President Obama slapped a 35% tariff on imports of Chinese-produced tires, the Chinese government started casting around for potential objects of retaliation, and, as Bertel reported, US auto exports to China made “a good tit-for-tat.” The US imported $1.8b worth of Chinese tires in 2009, while China imported $1.1b worth of US-built cars (including transplant brands) in 2008. You shoot our dog, we’ll kill your cat.”

Now, the Chinese Ministry of Commerce has concluded its “investigation” into US auto dumping and illegal subsidies  in the Chinese market, and it just so happens to single out the two automakers who are partially owned by the US. Coincidence? Not so much. [Hat Tip: Michael Banovsky]

(Read More…)

By on February 25, 2010

In its fight against American CAFE rules, Porsche is ratcheting up the decibels. For background on Porsche’s beef, see here, and here. For a possible way out, see here.

Unconvinced by electrification plans, Porsche’s new boss Michael Macht publicly joined the fray. He doesn’t mince words. “What’s happening here borders on a trade war,” said Macht yesterday evening, while Das Autohaus took notes. “We’ll keep at it. The German auto industry will not give up territory over there unnecessarily.”  Financial Times cited Macht as saying that “the Americans are spoiling for a fight.” (Read More…)

By on November 17, 2009

Bail! Picture missinginaction.be

As U.S. President Barack Obama landed in Shanghai for a weeklong visit to his largest creditor, China, the news awaited him that China’s Ministry of Commerce will investigate the U.S. government’s financing and rescue plans for the American auto industry, Shanghai Daily reports.

The move is part of China’s probe into possible dumping and subsidies on U.S.-made vehicles imported to China, the ministry said. Trade officials will be looking for dumping practices and for unfair government subsidies.
(Read More…)

By on October 29, 2009

Want more flagging sales? Picture courtesy renovomedia.com

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.
(Read More…)

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