Auto industry caught in the trade war crosshairs
Customs agents in Shanghai have refused to release a shipment of American-made Mercedes-Benz SUVs because of what they have described as a "safety risk."
Ostensibly, the Mercedes GLE and GLS models have a problem with their rear brakes that authorities want fixed before they are allowed into the country. But the timing of the move, just days after the Trump administration raised the stakes in its trade battle, triggering the Chinese to swat back with new tariffs on products that include American-made autos, has many observers raising eyebrows.
"This, unfortunately, appears to be part of a tit-for-tat in an escalating trade war, and it could reach crazy levels," warned Joe Phillippi, head of AutoTrends Consulting and a long-time Wall Street automotive analyst.
The Trump administration has to hope the dispute with China won't last long, Phillippi said. If it results in a sharp cut in U.S. automotive exports that could take its toll on jobs over the next few months. And that would likely backfire on Trump and the Republicans "because you don't want to hurt the industrial heartland on the run-up to the mid-term elections." For China, the growing dispute could shut down plans for its own auto industry, which has been flirting with the idea of more exports.
Responding to the latest tariffs levied by the Trump administration, China announced 25 percent tariffs on $16 billion in U.S.-made goods. That included the roughly $10 billion in automobiles that Chinese motorists were expected to purchase this year.
The impact could be significant considering that American-made vehicles were previously saddled with 25 percent tariffs upon reaching Chinese ports. On a $35,000 Ford Mustang, for example, duties already added about $8,750 to the base price. By doubling that figure, analysts like Phillippi warn that the Mustang — and a number of other U.S. vehicles — could wind up being priced out of what is now the world's largest automotive market.
https://www.msn.com/en-us/money/markets/auto-industry-caught-in-the-trade-war-crosshairs/ar-BBLOQ8V?li=BBnbfcN
Trade wars are easy to win - Donald J Trump
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