China, in retaliation against the US for imposing tariffs on Chinese steel and aluminum, and for proposing import duties on another $50 billion in products, has announced its own list of tariffs on about $50 billion worth of US products, including cars. The Trump administration’s new round of proposed tariffs are in response to perceived unfair trade practices, including intellectual property theft; Chinese IP theft currently costs the US between $225 billion and $600 billion annually, according to a seven-month investigation led by the United States Trade Representative.
A start date for enforcement of China’s new set of tariffs has not yet been announced, but if put into effect, they could seriously hamper US automakers’ ongoing efforts to grow in what is now the world’s largest automotive market. Ford has already been struggling to hold onto market share there, thanks in part to a bit of a stale product lineup; sales tumbled 18 percent year-over-year in January, falling 30 percent the following month.
Granted, the announced tariffs could mean less and less to Ford as the automaker goes about growing its manufacturing footprint in China, but still, some automotive parts are on Beijing’s new, $50-billion list.
Automotive News spoke to Capital Economics’ Senior China Economist, Julian Evans-Pritchard, who said that “the assumption was China would not respond too aggressively and avoid escalating tensions. China’s response is a surprise for some people.” However, as the tariffs have not yet been enforced, “it’s more of a game of brinkmanship, making it clear what the cost would be, in the hopes that both sides can come to agreement and none of these tariffs will come into force,” he said.
The Trump administration’s tariffs on steel and aluminum imported from China and a handful of other countries are already expected to be damaging to Ford and other automakers, with one financial institution estimating the damage to each Ford and GM at about $1 billion per year.