Directly hit the "American Department" affects the "German" US auto import tariff increase by 25%

Recently, the Ministry of Finance’s official website issued the “Announcement of the Customs Tariff Commission of the State Council Concerning the Expropriation of Customs Tariffs on US$50 Billion U.S. Imports (hereinafter referred to as the “Announcement”). The "Announcement" shows that the Customs Tariff Commission of the State Council has decided to impose a tariff of 25% on 659 items of approximately US$50 billion imported from the United States, of which 545 items of approximately US$34 billion will be imposed on July 6, 2018. Tariffs, the time for implementation of tariffs on other commodities will be announced separately.

According to the relevant rules, the 25% tariff from July 6 is mainly on automobiles, agricultural products and aquatic products. Among them, automotive products are mainly based on various models with displacements ranging from 1.5L to 4L. Except for a small number of engines, parts and some new energy models, the rest are all traditional fuel vehicles.

A number of industry sources told the “China Business” reporter that if the U.S. import tariff on the basis of 15% is raised to 40%, besides Tesla and Lincoln, U.S. brands will be greatly affected, and U.S. production will be exported to China. Some German cars will also be affected. Among them, Lincoln and Tesla, which are all imported from China, are the most affected.

Friction

This round of trade frictions had already become apparent and open as early as March of this year. In early March, the Trump administration introduced tariffs on steel and aluminum on a global scale, and announced at the end of that month that it will impose an import tariff of 25% on China’s 60 billion US dollars, including new energy vehicles, and provoke trade friction between the two sides. In response, the Chinese government has made a relatively mild counterattack.

On April 3, the U.S. government announced that it would impose a tariff of 25% on China's imported goods in accordance with the unilateral findings of the so-called "301 investigation." The total amount of imports was 50 billion U.S. dollars, mostly related to hi-tech in the "Made in China 2025" plan. field. On April 4, the Chinese government announced in accordance with relevant laws and regulations such as the "Foreign Trade Law of the People's Republic of China" and other relevant laws and regulations that it will impose a 25% tax rate on imports of automobiles and other products originating in the United States, involving an import volume of approximately 50 billion U.S. dollars.

A senior automotive industry official said in an earlier interview that the key lies in the "implementation time notice", which means that the U.S. auto import tariffs have more room for change.

In May, the two sides conducted several constructive consultations with high-level mutual visits between China and the United States. In late May, both China and the United States issued a joint statement in Washington, honoring each other not to fight a “trade war” and to stop (the US’s wording is: suspension) to impose tariffs on each other. China promises to increase the extent of purchasing goods and services from the United States.

On May 22, the State Council announced that starting from July 1, 2018, the tax rate of 135 tax codes with a vehicle tax rate of 25% and 4 tax codes with a tax rate of 20% will be reduced to 15%. On May 25, the U.S. Department of Commerce announced the lifting of the ban on ZTE’s sales.

When the Sino-U.S. trade friction gradually eased, on June 15th, the U.S. government unilaterally announced the levying of tariffs in spite of the previous agreement between the two parties. On June 16, the State Council also gave a counterattack of the same scale and intensity.

The person in charge of the Customs Committee Office of the State Council stated that in response to the emergency situation caused by the United States’ violation of its international obligations to China, China follows the basic principles of international law and the laws and regulations of the People's Republic of China Foreign Trade Law and the People's Republic of China Import and Export Tariff Regulations. Authorization, decided to impose the same degree of taxation on the same amount of imported goods from the United States, and defend their legitimate rights and interests.

The US issued a statement saying that if China takes retaliatory measures, the United States will continue to impose additional tariffs. In response, the aforementioned person in charge stated that China will reserve the right to take corresponding measures.

"The repeated and non-compliance of the Trump administration is a typical style of business. It only pays attention to the interests and does not pay attention to the overall situation." A scholar who does not wish to be named and has long studied the international economy told reporters. In his view, the Trump administration represents the interests of interest groups behind it, not the entire American public. The repeated policies, on the one hand, or the internal interests of interest groups behind the Trump administration are inconsistent. On the other hand, the mid-term election of the United States on the other hand may lead to its eagerness to obtain "partial results" in order to win support.

Earlier this month, the Chinese government had emphasized that China did not want to fight a trade war. However, in the face of the short-sighted behavior that the United States has done against others, China has had to respond with a strong blow, resolutely defends the interests of the country and the people, and resolutely defends economic globalization and multilateral trade. system. At the same time, all the economic and trade achievements of the two parties that were previously negotiated will also be invalid.

According to Megan Green, chief global economist at Manulife Asset Management, the Chinese side has been hard-pressed. In fact, the practice is based on negotiation. For example, it is the first to publish “On the Active and Effective Use of Foreign Investment to Promote High-quality Economic Development. The "Notice of Measures" provides incentives for market access, investment facilitation, and investment promotion.

"Talking to promote the situation" has become a new move for the US foreign trade game. The Chinese side needs to face the medium and long-term competition. The two sides clash the strategy. Competition is the endurance and durability of the impact brought by the trade war. An analysis of Ping An’s macro report.

Damage to "Japan" and "Germany"

According to the "Financial Times", in 2017, the United States imported 8.27 million cars and exported 1.98 million. Among them, the average price of imported cars was 25,500 U.S. dollars and the average price of exported cars was 33,300 U.S. dollars. Overall, the United States exports higher prices.

However, in the Chinese market, the share of American cars is not high. In 2017, China imported 280,200 complete vehicles from the United States, accounting for 22% of the total annual import volume; the number of cars exported to the United States was only 53,000, accounting for 5% of the total annual export volume.

According to Shen Wanhongyuan, the list of U.S. taxation rates in China covers areas such as semiconductors and chips, robotics and machinery, navigation and automation, and information and communications technology. It refers directly to the "Made in China 2025" strategy. industry. The counter-attack strategy of China is to restrict the United States' exports to China's advantageous industries, such as agricultural products, automobiles, aquatic products, chemicals, medical devices, and energy products. The increase of import tariffs on the United States will seriously impact the US auto industry.

At present, the U.S.-branded U.S.-branded cars that are sold in China but not yet domestically manufactured include Tesla’s full lineup and Lincoln's full lineup. They also include some of Ford’s, Chrysler’s, and GM’s high-end models. Among them, Lincoln and Tesla are generally considered the most affected.

According to data provided by Tesla (China), in 2017, Tesla sold about 17,000 vehicles in China, accounting for 16.5% of its global total. The year-on-year increase in revenue in the Chinese market increased by more than 90%, becoming Tesla's fastest growing market in the world. In the same year, Lincoln sold 54,000 vehicles in China, a year-on-year increase of 66%.

According to estimates by Li Yanwei, a member of the China Auto Circulation Association's expert group, if U.S. auto import tariffs are raised to 40%, Tesla will increase by 154,000 yuan to 286,000 yuan, and Lincoln will increase by 56,000 yuan to 250,000 yuan. “100, 000 yuan is a price point, to be distinguished by a price point, the consumer's car purchasing ability and the car purchase plan will be very different. The consumer's base number is like a pyramid, the number of consumers will increase by 100,000 yuan each. Sharp drop." Li Yanwei said.

As of this writing, Tesla (China) has not commented on this round of tariff increases. Lincoln (China) responded to reporters that Lincoln (China) will maintain the suggested retail price of all model manufacturers.

It is worth mentioning that in addition to the U.S.-based U.S.-based brands, the tariff increase will also affect some of the German and Japanese cars produced in the United States. It is understood that the brand models involved include Mercedes-Benz GLS, BMW X5 (another plant in Thailand), Acura RDX, Infiniti QX60 and other models.

Previously, after the release of the official 15% automobile import tariff rate on July 1, it had a direct impact on consumers' car purchase decisions and dealers' car-handling steps. "Because of the consumer's 'wait and see', the sales of car imports have not been very good in recent months, and there has been no normal 'Red May' phenomenon. The traffic volume in June was also small," said Li Yanwei.

According to Li Yanwei, the dealers of the US Department of Imported Vehicles are very passive. Before this, in order to raise the car after the tax reduction on July 1, many vehicles were left behind in the customs, and as a result, tariffs are now rising again. They do not know whether they are advanced by the current 25% tax rate or wait. The current conservative approach adopted by dealers is to follow the consumer's order to pick up the car.

According to Cui Dongshu, secretary-general of the National Association of Travel Unions, from July 1 to July 6, the US Department of American Automobiles will be subject to a temporary "honeymoon period" with a 15% tax rate. At that time, there will be a centralized surge in US-owned cars. "The increase in U.S. auto import tariffs is surely the most immediate impact of the U.S. car fleet. In the long run, it will stimulate many car companies to build factories in China," said Cui Dongshu.

In fact, car executives have expressed their position. According to a report in the Financial Times, Joe Hinrichs, head of Ford’s manufacturing department in the United States, said in a recent speech that automakers are looking at production from a global perspective. If Ford’s costs in the United States increase, the company There will be no hesitation in moving more overseas operations to more competitive regions.