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Trade Wars U.S. Attacks Parts And Components In China Counterattack The Most Injured Will Be Tesla

Apr 09, 2018

China imposes a tariff of 25% on imported cars. If 25% is imposed, the tariff will be as high as 50%. This will have a huge impact on Tesla and other imported cars that have not been domestically produced.


Following the United States’ proposal to impose a tariff list on Chinese products, the Chinese Ministry of Commerce announced on April 4 that it intends to impose a tariff list on the United States. Both lists are related to automotive products. What is different is that the United States mainly fires on Chinese auto parts products, while China mainly fights against American vehicles.


This time, the United States issued a list of 1300 individual tariff items, including 87023031, 87024061, and 87033101 in the automotive sector. Various components such as automobile motors, electric drives, and diesel engines were involved. The United States proposes to impose an additional 25% tariff on Chinese products on the list.


According to the Ministry of Commerce’s list of tariffs to be imposed on the United States, 27 tariff lines such as 87032362, 87034052, and 8703432 are involved. The products involved mainly include off-road vehicles, passenger cars, trucks, etc., as well as gearboxes, etc. Number of parts. China also imposes a 25% tariff on the imported cars originating in the United States.


“After tariffs were imposed on the United States, the tax rate on us reached 27.5%. However, the export volume of Chinese automobiles is not yet very large. The overall impact on auto brands’ car companies is not significant.” Assistant Secretary General Xu Haidong of China Association of Automobile Manufacturers The reporter said that it has an impact on companies like BYD and JAC that are currently expanding overseas.


However, China's new energy vehicles will not enter the U.S. market in large quantities in the short term. "We have two years of gaps in battery density and indicators with European and American countries. There are still gaps in the energy efficiency of vehicles and Toyota and other companies. It takes about three years to catch up. China is just now starting. Its technology in the field of new energy vehicles is immature, so passenger cars will not enter the U.S. market in large scale in the next five years.” Dong Yang, executive vice president of the China Association of Automobile Manufacturers, said in an interview with reporters that these U.S. policies are currently in place. The impact on Chinese auto companies is limited.


In an interview with a CFA reporter today, CLUCC Secretary-General Cui Dongshu said that China’s release of tariff countermeasures against the United States will seriously inflict US imports on vehicles, and it will be very accurate in countering US off-road vehicles, trucks, minibuses and other products. These are currently from China. Main products imported from the United States. According to the list of both parties, the impact on the automotive sector is still quite large. The two sides may not necessarily go to war, and they are more deterrable each other.


Cui Dongshu pointed out that China’s major imports of high-priced SUVs from the United States will have a great impact on U.S. imported cars once it is launched, and Mercedes-Benz and BMW made in the United States will also be affected. After all, there was precedent for the taxation of U.S. cars last time. Among them, Mercedes and BMW are also injured. Judging from the import structure in 2018, the U.S. imported cars performed particularly well in the overall Chinese imported cars. In particular, the 87032362 gasoline off-road vehicle imported from the United States has a large total volume. It reached 18,000 units in January-February this year, and the average unit price also reached 62,500 US dollars, which is a huge import beneficiary group. Among these Germans, Mercedes-Benz and BMW performed better.


Of particular note is the passenger car of 8703800, which is not listed as a purely electric motor vehicle. This type of product should be said to be mainly imported from Tesla and other pure electric vehicles. From January to February this year, the average import price of Tesla reached 90,000 U.S. dollars, and the import volume also reached 2,380 units. It should be said that the import volume is relatively outstanding.


Cui Dongshu believes that because of U.S. GM, Ford, etc., all of them are effectively localized in China. Many of Ford's main products, such as GM, are manufactured by Chinese companies and are therefore not affected by import tariffs. Tesla's import tariff is 25%. If the tariff is increased by 20%, the tariff will be as high as 50%. This will have a huge impact on Tesla and will lead to a surge in the prices of imported vehicles. Tesla is affected. The largest product. Since Tesla is not domestically produced, its import is the only supply. Currently its production capacity is limited, and the new Tesla 3 is entering the high-speed production stage immediately. Therefore, the stability of the Chinese market is particularly important, and stable tariff policies are needed to ensure stability. Sales.


From the perspective of total imports, US imported cars reached 280,000 vehicles in 2017, accounting for 22% of China's total imports. In 2017, China’s automobile foreign trade, the total vehicle import value was 51 billion U.S. dollars, the export value was 14.1 billion U.S. dollars, the trade deficit was 36.9 billion U.S. dollars, the spare parts import volume was 38.8 billion U.S. dollars, the export volume was 68.6 billion U.S. dollars, and the trade surplus was 298 One hundred million U.S. dollars. The Chinese auto industry’s foreign trade deficit in 2017 was US$7.1 billion. Among them, in China’s automobile trade with the United States, China’s total vehicle exports to the United States amounted to US$1.4 billion, the total amount of vehicles imported from the US was US$13.1 billion, the trade deficit was US$11.6 billion, and China’s auto parts exports to the United States were US$17 billion. The imported parts and components were 2.8 billion U.S. dollars and the trade surplus was 14.2 billion U.S. dollars.


Cui Dongshu believes that the trade war has a certain loss for both the Chinese and American auto industries. The luxury cars in China are hurting the interests of the rich and have little impact. The U.S. companies have great losses because the U.S. auto industry is an important pillar industry in the United States. What is more hopeful in the industry is that the two sides reach a certain peace reconciliation in order to maximize mutual benefits.


Affected by this news, U.S. automaker stock prices fell. The Chrysler U.S. stock price fell 2.52% before the market, Ford fell 1.35 percent, and the Universal fell 3.22%.


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