Tariffs continue to pile up on overseas goods – this time including $50 billion worth of Chinese imports.
Today, the U.S. government released two new lists of tariffs on goods, this time from China. The first list includes $50 billion worth of tariffs on Chinese-sourced imports. Cars, parts and other supplies purchased by suppliers to produce domestic automobiles are all affected.
On June 1, the U.S. introduced a 25-percent tariff on steel and a 10-percent tariff on aluminum from some of our closest allies. After targeting Canada, Mexico and the European Union with those tariffs sparked immediate retaliation. Now, China is also in the mix, allegedly in the interest of preventing China from forcing companies to share technology in order to stay viable, as well as deterring theft of intellectual property by Chinese businesses and government to create cheaper replica products or services.
Bloomberg and Reuters both reported on the new tariffs, which start going into effect on July 6. The first wave will affect $34 billion worth of goods, while another $16 billion is under review. President Donald Trump promised to build upon these measures if China strikes back: “The United States will pursue additional tariffs if China engages in retaliatory measures.”
China’s response and effect on the auto industry
The Chinese government has, in fact, responded, hitting back against the U.S. Trade Representative’s list of about 1,100 products with tariffs of their own. The U.S. government’s duties against China includes steel and equipment used for metalworking, among several other products used in the automotive industry. China’s response includes tariffs on U.S. automobiles.
Following the news, share prices of the Big Three U.S. automakers were down compared to high points reached earlier in the day. However, one of the greater concerns is how duties on Chinese parts will impact the industry. The U.S. contends these measures are meant to combat the Chinese government’s industrial policies – namely “Made in China 2025”. In that plan, the U.S. Trade Representative’s states China is using unfair trade practices to gain an edge, costing the American economy billions in lost revenue and millions of jobs.
On the backs of recent U.S. – China tariffs, Washington has also divulged a second list comprising another $100 billion worth of Chinese products. While sales in the auto industry have fallen from records set last year, new tariffs may exacerbate that effect. In the near future, cars may become much more expensive, and American auto industry workers may suffer the effects of growing trade conflicts between the U.S. and its largest trading partners.
Below is a list of products on which the U.S. government has placed tariffs, including motor vehicles and parts. [Source: U.S. Trade Representative’s Office]