Reports are circulating that China plans to reduce U.S. auto import tariffs. The reports circulated after a Chinese government official confirmed the plan to U.S. officials during a phone call. The tariff cut is expected to benefit German automakers like BMW and Daimler.
Reports are circulating that Chinese Vice Minister Premier Liu said on a phone call with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin that they are planning to reduce the tariff on automobiles imported from the United States from 40 percent to 15 percent.
The reduction in the tariffs indicates that the trade war between the two countries is cooling off. According to Kristin Dzichek, an analyst with the Center for Automotive Research said that the actual effect of the plan may be limited on U.S. automakers. She added that foreign automakers will gain more from the reduction than the U.S. builders like Ford and General Motors. She noted that the tariff imposed on metals used in building cars greatly affected the car production in the United States.
Most of the U.S. carmakers, with the exception of Tesla, sell their products on their own local market to avoid the imposed tariffs. Ford and General Motors agreed on a joint venture located in China where they build cars to be sold on that same market. According to Dzichek, Ford exports more cars to China than General Motors. General motors have lesser popularity in China compared to Ford. The two companies are exporting their famous cars like the Ford Mustang and the Chevrolet Corvette in China.
According to Jeff Schuster, the President of global forecasting for LMC Automobile, currently, most of the imported cars from the United States have German Brands. German automakers are greatly affected by the trade tension between U.S. and China. They are the biggest distributors of China-bound sport utility vehicles manufactured from the United States. The Germans also import luxury sedans into the United States.
Germany based BMW is the largest U.S. made cars distributor to China and Daimler, another German carmaker, ranks second. According to reports, BMW exported around 65, 000 automobiles made in South Carolina to China. Daimler Alabama based production is reported to export 57, 000 cars. The German brands sell more cars than the combined exports of Ford, Fiat-Chrysler, and Tesla at around 75, 000 cars.
