Trade tensions with US test resolve of Chinese consumers
BEIJING (Reuters) – Guo Qingshan delights in riding his 400,000-yuan ($63,839) Harley-Davidson motorbike around Beijing’s suburbs.
“I love the sound of the engine and the muscle of the motor,” he said. “When I ride it, I feel free and proud.” However, Guo, 32, has his limits. Deteriorating trade ties between the United States and China could mean American imports, including Harley-Davidson motorcycles, could be much more expensive in the future as the two countries trade tit-for-tat tax hikes on each other’s goods.
If prices rise, Guo said he would not contemplate buying another Harley.
Since entering office, US President Donald Trump has taken a hard line on trade. Last month, the world’s biggest economy said it would impose tariffs on steel and aluminium imports from most trading partners, including China.
In response, China slapped additional import taxes on 128 US products, including frozen pork and wine. Soon after, it said it was considering additional duties on 106 US imports, though it has not said when the new tariffs could kick in.
US goods in the crossfire include soybeans, cotton, autos, auto parts, whiskey and particular varieties of wheat, with their value totaling $50 billion.
The tensions are already affecting consumers in China.
Zang Yi, who owns a Tesla car, said if the trade tensions resulted in pricier US imports, she would not consider American brands when the time comes to buy a new car.
“With the tariff, I would have to pay tax of 100,000 yuan to 200,000 yuan if I were to buy a new Tesla,” she said.
Liu Anqi, 25, has just opened a bakery in Beijing with her friend. She also teaches customers how to make cakes with a brand of flour that uses only wheat from the United States and Canada.
“Flour is one of the most important ingredients in baking, and its quality varies with different brands,” Liu said, adding that finding a new brand would be time consuming, and higher taxes on this wheat would force her to raise cake prices and tuition fees, which could turn customers away.
ALREADY EXPENSIVE
Not all business owners are concerned. At Wolfgang’s, a high-end steak house in East Beijing’s Sanlitun district, head chef Liang Xin said US beef has always been limited in China, so he does not know how customers would react if the restaurant has to raise prices.
A 15-kilogram whole cut of beef from the US is around 20% more expensive than its Australian counterpart, said Daniel Sui, the steak house’s deputy general manager.
“Customers like US beef because it tastes juicy and tender,” he said. “But Wolfgang’s only sells around seven to eight pieces of US imported beefsteak each day. The limited supply is because the Chinese government bans feed additives, and only 5% of US beef is qualified for export.”
Liu Ming, a chef at a Sichuan restaurant in Beijing, said the oil that his restaurant uses is produced with soybeans imported from the US, and the business will not change the brand even if prices rise.
“We use this oil because it gives the food a bright color and does not leave a strange smell or taste,” he said. “We don’t know what will happen to our dishes if we change the oil.”