I am a car produced in the United States. These days it’s getting harder for me to join my peers across the Pacific Ocean to reach the world’s largest car market – China. That’s because now I am subject to a 40 percent tariff if I want to enter China.
You see, it didn’t have to be this way. We were ecstatic in May when China announced that it would lower tariffs on auto imports from 25 to 15 percent starting the first of July. That enthusiasm turned out to be short-lived as the US escalated trade tensions with China.
That enthusiasm turned out to be short-lived as the US escalated trade tensions with China.
I am quite concerned as China is not only the world’s largest auto market, but also the second most popular destination for US made cars right after Canada. But then again, I never had much trouble going to the “Great White North.” All I need to do is simply roll across the border…and voila! But China being the second largest export market for US made cars, now that’s a feat!
In fact, from 2010 to 2017 exports of US made cars to China grew a whopping 240 percent! That makes China one of America’s fastest growing destinations for auto exports. In 2017, America shipped 1.6 billion US dollars more in new passenger vehicles to China compared to all of the European Union countries combined. China is an auto market where I don’t want to lose momentum.
In 2017, America shipped 1.6 billion US dollars more in new passenger vehicles to China compared to all of the European Union countries combined.
But now, US made cars are at a disadvantage versus peers from other countries. A car from say Germany or Japan pays a tariff rate that is 25 percentage points less compared to me. In July, when China’s counter duties on the US came into effect, European and Japanese car shipments to China grew at a much faster pace compared to American ones. The value of cars and car parts from Europe shipped to China more than tripled that of the United States in July!
US-made cars are facing uncertainties in the future with the new tariffs.
As a sturdy American made car, I feel kind of blue. Chinese consumers seem to really like me. Look no further than General Motors. Although many GM cars are produced in China, 2017 marked a sixth straight year in which China has been GM’s top retail market! I don’t know what the future holds for me, but how much might I lose out at the expense of cars from other countries?