Sunday, December 2, 2018

Trade Truce by China and U.S. Gives Both Sides Political Breathing Room

Five Chinese automakers have disclosed plans to enter the American market in 2020. In mid-November, GAC, one of China’s biggest automakers, showcased its vehicles, not to mention its global ambitions, at the annual auto show in Guangzhou, the southeastern Chinese city where the automaker is based.

“We have accelerated internationalization plans and built a global network,” said Yu Jun, GAC’s president, before projecting overhead a giant map with scarlet arrows fanning out from southern China to Europe, the Middle East and the United States.
Administration officials have said they hope to prevent a repeat of what happened from the 1970s to the 1990s, when an influx of Japanese and then South Korean cars resulted in heavy job losses in Michigan, Indiana, Ohio and Wisconsin — states that President Trump is counting on for his re-election campaign in 2020.
China is already the world’s largest car market and biggest maker of cars and car parts. General Motors imports Buick Envision sport utility vehicles from its Chinese joint venture into the United States. Since July, it has faced a 25 percent American tariff on these vehicles, though it has asked the Trump administration to exempt them. The 25 percent tariff is in addition to the United States’ longstanding tariff of 2.5 percent on cars from all over the world.
By contrast, China’s tariff on car imports from all over the world was 25 percent until last summer, when it cut the tariff to 15 percent. China also added a 25 percent tariff just on American cars over the summer, for a total of 40 percent.
Mr. Lighthizer, an Ohio native who played a key role in car sector negotiations with Japan in the 1980s as deputy United States trade representative under President Ronald Reagan, underlined the Trump administration’s focus on cars last week by threatening to raise American tariffs on Chinese cars to 40 percent.
But Michael Dunne, the chief executive of ZoZo Go, a San Diego automotive consultant, said that even at 25 percent, the tariffs would discourage Chinese automakers. “It gives them reason to pause and reset their strategy,” he said.

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