The escalating trade war between China and the United States has made automotive parts a pain point for the United States
2024-05-15
The trade war between China and the United States was difficult to distinguish, with the United States imposing a 25% tariff on car parts from China, and China retaliating with a 25% tax rate on imported cars from the United States. For American car manufacturers, which rely heavily on Chinese automotive parts, the impact is quite significant. Reuters recently pointed out in a column that automotive parts, which rely heavily on Chinese manufacturers, are likely to become a sore spot for the United States in this trade war.
Former Financial Times journalist Gina Chon stated in a column for Reuters that according to data from the US Department of Commerce's Bureau of International Trade, the United States imports $18 billion worth of automotive parts from China, second only to Mexico. After increasing tariffs, the complex documents and time required for customs clearance may prevent parts from meeting delivery deadlines, potentially causing chaos for American car manufacturers. The dependence of American manufacturers on Chinese parts is quite high, with 31% of brake parts being made in China, and the metal of other main parts being outsourced to Chinese manufacturers. This may be because Chinese manufacturers initially locked in parts with high overseas demand from American car manufacturers, and the production capacity of American manufacturers is not yet in place. Due to the "timely system", the inventory of each factory is not too high. If the supply chain cannot catch up in time, it may cause a blow to American automakers. Gina Chon believes that China can provide official subsidies in the supply chain, but this may increase the support of Trump's trade policy.
The delegation of Detroit's three major car manufacturers once reported that 35% of car parts in the United States are currently manufactured by foreign countries, and if a 25% tariff is imposed, a car may increase its cost by $2000. Bloomberg once reported that Chinese parts factories were affected by the US China trade war, and some Chinese aluminum alloy tire factories were considering raising their prices by 5%. The Nihon Keizai Shimbun also reported that Kunshan Huizhong Company in Jiangsu Province, China, faced with the 25% tariff on auto parts exported to the United States, decided to bear 15% of the part and transfer 10% to customers.
Such high taxes may also make it difficult for automobile factories to return to the United States. Kristin Dziczek, the vice president of CenterforAutomotive Research, once told Nihon Keizai Shimbun that because the tariff policy of the Trump government is full of uncertainty and the automobile factories need a lot of investment, automobile manufacturers will not take this risk.
AutoMotive, a Japanese automotive market research company, believes that under the influence of the China US trade war, the Chinese government can legitimately crack down on American car dealers. At the end of June this year, General Motors submitted an opinion letter to the US Department of Commerce, stating that the impact of the trade war had already affected GM's sales and opposing an increase in tariffs. In this Sino US trade war, American car dealers did not benefit.
Under the influence of the trade war, American purchasing customers may reduce costs by transferring orders. Hopkins Manufacturing, a manufacturer that originally purchased parts from 45 factories in Chinese Mainland, told the media in August that it would consider purchasing auto parts from Taiwan instead.
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