THE US/CHINA TRADE WAR WILL INFLUENCE CAR PRODUCTION
The on/off trade war between the US and China and the US and the EU is already influencing global car production. For example, Geely-owned Volvo has announced lower volumes of exports to China of the S60 from a new US plant in Charleston as a response to sales dragged down by higher import duties. As a result, a question hangs over US investment for the XC90, with sales in China under threat.
Meanwhile, BMW is increasing production in China of the X3, a model that previously was globally sourced from South Carolina. Others – like Ford, which exports the Mustang to China – are remaining cagey about their response to the tariff war. In the US, this has seen duty increase to 25% to match China, while the Asian country has responded by hiking its duty to 40%.
This tit-for-tat might actually help European car makers because China, to spite the US, reduced tariffs on cars made everywhere outside the US to 15%. We can expect more upping-and-downing of tariffs during 2019 as the two superpowers manoeuvre around each other with the Trump administration even thinking about detonating its own 40% tariff on Chinese imports.