China Slaps US-Made Cars With 25% Tariff: BMW, Ford, Mercedes And Tesla Set To Feel The Pinch

The trade war between China and the United States continues to heat up as the communist country has announced plans to implement tariffs on $75 (£61 / €67.3) billion of goods imported from the United States.

The tariffs will affect of a number of different products including automobiles manufactured in America. CNBC notes this could have serious consequences for a number of different automakers including BMW, Ford, Mercedes and Tesla.

These companies export a number of US-made vehicles to China including best sellers such as the BMW X5, Mercedes GLE and Mercedes GLS. The tariffs will make these models significantly more expensive in China and this could drastically lower their appeal.

Unsurprisingly, the auto industry isn’t happy with the trade war and the CEO of the Association of Global Automakers told The Detroit News, “The tit-for-tat tariffs, absent any meaningful negotiations, are damaging to the American auto industry.” John Bozzella added “When these tariffs were initially imposed by China in 2017, American exports of finished vehicles dropped by 50%. We can’t let that happen to American workers again.”

Ford, which sold more than 46,000 US-made vehicles in China last year, told CNBC “We encourage the U.S. and China to find a near-term resolution on remaining issues through continued negotiations.” The company added, “It is essential for these two important economies to work together to advance balanced and fair trade.”

China announced the tariffs in response to President Trump’s decision to impose a ten percent tariff on $300 (£244 / €269) billion worth of Chinese goods by the end of the year. Trump fired back in a tweetstorm earlier today saying the United States has lost “trillions of dollars” to China over the years and America would be “far better off without them.” The President went on to say “Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA.”

While the President obviously doesn’t have the authority to do that, he announced increased tariffs on Chinese goods late this afternoon.

  • db

    Can anyone alive stir things better than the Donald.

    • USOZ

      They re-slapped those tariffs after we placed more. Just saying buddy 😉

  • Mr. EP9

    Here comes the retaliatory tariffs which we lead to yet another mess. Brace yourself, folks.

    • Six_Tymes

      Nothing different really than what Obama’s MESS did in 2009 when he single handedly wrecked the US economy and companies “shed full time jobs for 3 years straight. That affected the world wide economy, just as this will. Hopefully not as bad.

      • Joe

        What are you talking about? The economic crisis started in 2008 before Obama was even elected (as in when it was first properly felt, the threads and causes of it began much earlier). Anyone who was alive at that time should know that.

        It’s not cute to spread lies.

        • RIGHT? MY RECOLLECTION IS THAT CLINTON LEFT US WITH A SURPLUS AND BUSH SPENT IT. OBAMA GOT US BACK ON TRACK AND DONNIE TOOK CREDIT. HIS ERRATIC BEHAVIOR IS AFFECTING THE ECONOMY AND HE HAS NO ONE TO BLAME BUT HIMSELF.BUT OF COARSE HE WILL.

          • Thetruthísntalwayspopular

            Clinton of the sub prime Mortgage fame?……

          • bd0007

            That’s Phil Gramm.

          • Afi Keita James

            Yes but the Clintons along with both political parties went along with it.

          • NupeSquare7

            Absolutely right!

          • Paul Webster

            Your recollection is incorrect.

          • NO, ACTUALLY IT ISN’T.
            GET OFF YOUR KNEES, DONNIE DOESN’T CARE ABOUT YOU. HE FLIP FLOPS DAILY AND HAS NO CLUE WHAT HE’S DOING.

          • Paul Webster

            Clintons budget “surplus” was a CBO projection, never happened. Bush had a CBO budget “surplus” that never happened either. Clinton’s “surplus” included CBO projections resulting from NAFTA. Bush’s “CBO surplus projection did not foresee 9/11. Obama “choked” the economic sector largely through Executive Agency regulations and Executive orders.
            Trump’s “rebound” is largely the result of rescinding Obama executive orders and curbing the bureacratic regulations in executive agencies. Don’t be a dolt. BTW, when i met the current POTUS he was a supporter of Clinton…. and I was sitting when we shook hands. I don’t expect any President to “care” about me, but I do wish him well as he navigates the swamp. History will be the judge of whether he knows what he’s doing, I am as flummoxed as the next person when I pay attention to this Presidency in real time. I like to think I have a life beyond pop culture politics.

          • TIME WILL TELL. IN THE MEANTIME HE’S WITH THE C7 POUTING AND TELLING THE HOST HE’S GONNA LAY THE BIGGEST TAX EVER ON THEIR W(H)INE.

        • Afi Keita James

          But nobama didn’t do anything to stop it, he just kept it going like the rest.

          • Afi Keita James

            he’s just as much as to blame as the rest of the two heads of the same bird.

          • Stigasawuswrecks

            Obviously he did do something to stop it because it actually stopped under him.

          • bd0007

            That’s what the TPP was for – to form a trade bloc that could counter the weight of China.

            Add the EU to the mix and China would be fighting a losing battle (instead, China is fighting a one-on-one battle which they can manage).

          • Afi Keita James

            The TPP also threatens American sovereignty just like NAFTA and the rest of these godawful trade agreements that have absolutely nothing to do with free trade.

          • NupeSquare7

            What! The recession stopped because of decisions his administration made to turn it around.

        • Nick099

          You are correct that the great recession started in 08. The causes would take volumes to explain properly. Suffice it to say elements within DC establishment of both parties ingratiated themselves with Wall Street, for money and political purposes in a scheme that infected the world banking system.

          Oblozo followed a Keynesian approach to the crisis….which, like Japan’s “Lost Decade” mired the US in an economic malaise for 8 years.

          • bd0007

            Sorry, while some (New Dems) went along w/ Republican economic/regulatory policies, it was mostly the Republicans led by Phil Gramm (who is now living the high life).

      • Astonman

        You are waaayyy off based. Please look at the numbers.

      • bd0007

        LOL!

        You mean Dubya’s mess, or more accurately, Phil Gramm’s mess.

        Gramm spearheaded the legislation which allowed Wall St./hedge funds/mortgage lenders to engage in what was basically world’s largest Ponzi scheme.

        Gramm also was responsible for the legislation which allowed Enron to manipulate energy markets (see “Enron Loophole”), w/ his wife having served as the head of the CFTC at the time Enron asked for exemptions from regulatory oversight and surprise, surprise – later served on Enron’s Board.

        Based on your post, you have absolutely NO clue in what you’re talking about.

        • Afi Keita James

          him and both political parties as a whole.

        • Paul Webster

          You are the clueless one, hands down.

  • THAT’S WHAT HAPPENS WHEN AN AMATEUR IN THE WH WINGS IT.

    • Nick099

      The only amateurs are the DC politicians who let China get away with theft for decades.

      • bd0007

        The Dotard sure had no problem having his and his daughter’s crap being made in China.

        And only an amateur would pick a one-on-one battle when the smart thing to do would have been to build a coalition which could have put a lot more pressure on China.

        China is hurting, but they could probably bear the pain as they are trading and completing trade deals w/ other countries/trading blocs.

        • jimie orleg

          And that was so easy to do, all the presidents before him did it??

      • db

        I don’t get why so many of the anti-Trumpers fail to recognize this obvious fact and focus on here and now.

        China has been laying a licking into the US and Canada for four plus decades. Its about time somebody stood up to it. The pain we are feeling now has been coming our way for a long time.

  • Six_Tymes

    START MAKING CARS IN YOUR OWN COUNTRIES

    • Matt

      So Toyota, Honda, BMW, Mercedes, etc should all pack their bags and stop manufacturing in the US? Ok let’s get them to leave tomorrow.

    • Stigasawuswrecks

      Do you know how many Americans would suffer from this? Let BMW leave Spartanburg and you’ll see that whole area collapse.

      • Joe

        To be fair, that is kinda the aim of the tariffs. Make it so the US will lose industry to other, more amenable trading partners.

    • Bige Lee

      Hyundai/Kia leaving too

  • Ricki Boo

    six-tymes appears to not have access to any information, knowldege, facts or common sense. Hmm.

  • bd0007

    Pretty much every country has issues w/ China over that (among other things).

    The stupid thing to do is try to fight a trade war one-on-one.

    The smart thing to do would have been build a coalition w/ the major trading powers and countries that trade w/ China (such as the ASEAN nations), but the Dotard went the other way and insults our allies and picks trade war battles w/ them as well.

  • bd0007

    That’s what big corporations want; Walmart was the one that spearheaded China being a manufacturing center.

    • Afi Keita James

      and it drives me nuts, this just proves that our politicians from both political parties do not care about the American people.

      • Matt

        Almost every country outsources their manufacturing to China. It helps the bottom line, and lowers the cost of products so more consumers buy them. It may not be ideal, but unless you want all your consumer goods to cost much much more, it’s the only solution as nobody can complete with China for manufacturing cost.

        • KenjiK

          The USA are responsible for this situation. Companies were looking for ways to maximize their profits, so they sent production to countries with cheap labor cost. Lowering the price for the customers has never been the main objective. Maximizing their profits was.

  • EyalN

    The taxes are so high on imported cars in china that it is impossible to sell them and all car companies building them in china.
    The problem is that you can’t just open a car company in china, you need a local partner and that local partner copy your cars.
    The new taxes are not going to change anything GM, Jeep, Ford that are sold in china are made in china

    • Joe

      The taxes actually weren’t that high before the trade war began, and were a manageable/acceptable amount for high-end imports from Lexus, BMW, Mercedes-Benz, Lincoln, etc. (obv it wouldn’t make sense with any tariff to import cheap/low-end models, as you see by how high the prices are for the current Renault Captur and Suzuki Ignis that are imported).
      This rise will hit BMW and Mercedes-Benz (and their Southern US production facilities) hardest I reckon, which is kinda the point. Harm the Trump-voting heartlands.

      The local partner does not ‘copy’ the cars. They are co-produced, usually the stake is 50:50 but sometimes one partner has more. For example, BMW owns a larger share of BMW Brilliance than Brilliance does. If the international brand deems their partner a security risk (in which case why would you partner with them when it’s so difficult to get a partnership approved as it is?) they can still ‘localise’ and reduce production costs by using older tech… for example the China market Skoda Kamiq uses an older platform than the European version, the Chinese Audi Q2L is on a different platform than the EU Audi Q2, etc.

      As for the insane demand that US companies exit China… yeah, that won’t happen. SAIC-GM and SAIC-GM-Wuling, for example, are of global strategic importance and are very very successful.

      • EyalN

        87.1 percent tax on imported car.
        All Chinese partners are selling the same cars under another name

      • krusshall

        It’s not that high until one manufacturer isn’t paying it and now your competitor has a 15% price advantage on you.

        • Joe

          “Until one manufacturer isn’t paying it”
          The consumer generally pays in the end, as tariffs tend to be passed on to the consumer – if that doesn’t happen then the manufacturer slims their profit margin. The manufacturer is free to swallow the tariff itself and not pass it to the consumer, but that makes little business sense, especially when an imported car tends to have a premium perception than a locally-produced one, which would allow the manufacturer to charge more.
          If the tariff is not paid (generally at point of entry) the vehicle cannot be imported into the country. Often even if the tariff is paid, there are other issues to contend with (such as Tesla mislabelling an entire shipment of cars, causing it to be held at the port for a while), but the biggest of these is usually political issues. A diplomatic issue with France negatively impacted Renault imports in the recent past, the same happened to imports from Japan, and now to imports from the US.
          The manufacturers who don’t pay the import tax are the ones who aren’t importing because they produce locally. The major brands who don’t produce locally and are import-only are Lexus, Subaru, and a number of high-end luxury/performance brands such as Porsche.
          Even if it were possible to not pay the 15% import tax and still sell imported vehicles tax-free, that would not give a 15% price advantage… That’s not how maths and percentages work.

          15% tax on a finished car actually isn’t that high, since before July 1st 2018 it was 25%, and that is still lower than car import taxes in other nations (Malaysia is 30% for non-ASEAN countries, for example).
          The difference widens between imported cars and locally-produced cars due to other factors. For example, production costs such as the workforce, building maintenance, raw materials, parts, etc etc may be/are more expensive in countries cars are imported from (such as the US or Germany) than in China, since in China the factory costs, workforce, etc are all much much cheaper, hence it’s an attractive place to manufacture. Likewise, vehicles produced in China may have their prices forced up by the higher cost of imported parts versus locally produced, which is common in global/premium branded models to protect their reputation for quality.

          It’d be cool if you became informed before making wildly ridiculous statements.

          • krusshall

            Thanks professor Joe. You can microscopically analyze the entire cost structure all you want but the tariff amount is what it is and it’s an additional and significant fixed cost burden to whichever manufacturer imports versus domestically manufactures.

          • Joe

            Yes, that’s exactly what I said. The tariff amount is what it is and must be paid.

            What you said was “It’s not that high until one manufacturer isn’t paying it and now your competitor has a 15% price advantage on you.” implying that a manufacturer can import things and just not pay the tax.

            You can be snide and say something different and pretend it’s what you said after the fact all you want, doesn’t change the meaning of what you initially said.
            China is not the only market that adds a tariff, and its tariff is lower than the import tariff in many, many other countries, being only 15%.
            The US has its ‘chicken tax’ which is a 25% tariff on light trucks, which is more of a barrier to importing (in terms of light trucks) than China’s import taxes are.

            Anyway, that’s the ENTIRE POINT of import tariffs – to make domestic production more attractive. Hence, almost everyone does produce domestically and strategically in China, the world’s largest new car market.

          • krusshall

            Professor Joe, have fun schooling others as I’m dropping your class.

  • 85ZingoGTR

    And here’s GM, burned all the bridges with other markets so they can put all their eggs in Chinas basket. This will end very well for GM.

    • Afi Keita James

      all china has done is steal from us and americans are suffering as a result.

      • 85ZingoGTR

        I’m not disagreeing with you at all. But I am pointing out how foolish GM is for abandoning all their other markets, including to an extent, the US but are cashing all in on China. If things turn sour with China and they land up being a casualty of trade war as a result, then what? Another bailout? Screw that! Go ask chairman Xi for a bailout. See if he’ll give two damns. Americans shouldn’t have to bail them out after they closed four factories here.

    • krusshall

      GM exports a very small percentage of vehicles from the US to China hence why the headline doesn’t include GM.

      • 85ZingoGTR

        If China decides to give GM hell because they are an American company, then they have alot to lose. They sell way more cars in China than they do here.

  • pxsupply

    Be pissed off at our politicians. We have one of the most unfriendly business tax codes in the world. 74,000 pages of tax compliance cost a lot of money.

  • Afi Keita James

    and it makes me sad and sick, no wonder we the American people continue to suffer as a result.

  • USOZ

    Automation shrunk our manufacturing base more so than any Asian country. No longer do you need 50,000 ppl to make a car in a factory, you only need 2,000.

  • Bob

    Hence things tend to be built in countries that are cheaper to manufacture in as per Afi’s question.

    • db

      Ultimately, don’t you think that things balance out? Why are we depriving our society of the middle class? Why do we buy so much useless stuff that just goes to fill up our landfills. Nothing is repairable anymore. It is all use and toss.
      Planned obsolescence is no way to build up our country.

      • Bob

        Opinions about whether it’s wrong or right were never part of the discussion.

        I don’t agree or disagree with China being more desirable for manufacturing because of the cost basis. Value is at the core of any capitalistic construct whether we believe it’s wrong or right.

        The USA was never built upon the expectation that its corporations would do better by it. Corporations do as best for themselves as the legal framework allows them to, any benefits the US accrues are a byproduct of this activity.

        Instead of complaining about how we should be doing better, just do better.

        One of China’s biggest threats is touted to be 3D printing. The US is one of the biggest drivers of advancement in technology in the modern age.

        Create something that offers better value than China’s cost basis for manufacturing. That’s the only real way to get self-serving corporations to pull manufacturing out of China.

  • db

    So be it. This has been decades in the making and for the thousands and thousands of jobs lost in the manufacturing industry, why not spread the pain across the board?
    As a child, I still recall everything around me was solidly constructed. Things would break and we would fix them. Now we have shipped off the technology and the raw materials to foreign cheap labor and it gets them working while over here our welfare state grows, our students are getting dumber (when was the last time you heard a student failed a year) and people have forgotten what working and saving is all about.

    We are rapidly losing our discipline and personally, I’m sick of seeing so many obese people who have their noses glued into their smartphone 24/7 bragging they binged on the latest mind numbing tv show.

    Maybe the western civilization needs a good shakedown.
    Remember buddy, we get what we deserve.

    • USOZ

      So be it? So you are
      Ok being sidelined? Okie dokie buddy whatever you say.

      • Paul Webster

        Let the Aussies, Brazillians, Kiwi and the like see how they like life under the heel of Xi’s jack boot. The time still exists for the US to get out from under.

  • Stigasawuswrecks

    I have some nice snake oil to sell you.

  • KenjiK

    One word : Greed.

  • Joe

    That happened in July 2018.
    So yes… in a way.
    Everyone else will still be at 15%, but vehicles manufactured in the US will be charged at 25%, which puts them at a disadvantage on the marketplace where prices are generally low, which is the point of doing it.

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