Posted on 07/10/2018 6:33:11 AM PDT by reaganaut1
BERLIN—President Donald Trump’s trade battle with China is threatening the U.S.’s growing role as an auto exporter.
In recent years, BMW AG BMW, Daimler AG DMLRY and China’s Zhejiang Geely Holding’s Volvo Cars have invested billions to expand U.S. factory production with the goal of exporting a significant number of vehicles to China and other markets world-wide.
But the tit-for-tat tariffs on U.S.-China trade could prompt the manufacturers to rethink that strategy. On Friday, China raised to 40% its tariff on auto imports from the U.S. as part of a broader retaliation against the Trump administration’s move to impose duties on $34 billion in Chinese-made goods.
BMW and Daimler are among the foreign auto makers that stand to suffer the most from the move. Both German auto makers have massive factories in the U.S. South that employ thousands of workers and build luxury sport-utility vehicles for sale in the U.S. and export to China and Europe. The tariff will force the companies to either charge customers in China more or absorb the added costs.
...
BMW last year sold 385,900 vehicles made at its factory in South Carolina. Of those, 87,600 were shipped to China, while another 112,900 were sent to Europe. Any new vehicles BMW ships from its U.S. factory to China will be subject to the 40% tariff, making them more expensive than the models that rivals build in Europe and then ship to China.
Daimler’s Mercedes-Benz brand sold 340,000 vehicles in the U.S. last year, a mixture of imports and vehicles produced at its plant in Tuscaloosa, Ala. That plant is the global hub for the brand’s GLS, GLE and GLE Coupe models and makes C-class vehicles for the North American market.
(Excerpt) Read more at wsj.com ...
BFD, Europe has the VAT, isn’t that like a Tarrif? Those who can afford will buy.
No, VAT, isn’t like a Tarrif. It is much easier to understand if you think about it as a sales tax imposed at every step of production which adds value to the work in process. Thus, the name.
I’m fine with the tariff, but in South Carolina, we ought not try to collect it at Ft. Sumter.
You are right! We should capitulate right now, tell them we were wrong, and pay whatever confiscatory fine they levy on us.
Or did you mean something else?
Trump is about to learn that trade wars involve casualties — for us as well as them. If the rest of the world forms a solid block against us, our casualties are going to be higher than we thought — it will no longer be just us against small economies like Canada and Mexico.
For example, lets say the cost, including corporate income taxes and VAT taxes, to build a new car is $10,000 in the US and $10,000 in Germany (including $2k in VAT tax in Germany and $2k in income/other taxes in the US). In theory, there is no advantage, so US should focus on certain cars and Germany on others and can free trade at all. With the current VAT system though, Germany can export their car to the US for only $8,000 cost (because they get the $2k in VAT refunded) while the US car in Germany cost $12,000 ($2k in VAT added). This puts US car manufacturers at a significant disadvantage when it comes to imports/exports.
Actually, for the boundaries of this article, the impact may be minimal. Since some of the production is exported to China, why not just redirect the sales to the US rather than import cars from China. Don’t know the actual numbers, but it would be interesting to see them.
Another day, another free traitor article from you.
Yawn...
Too bad statistics don’t bolster your arguments, but there are always individuals that can be cherry picked for the globalist cause.
Take your free traitor crap elsewhere- and your username is an insult.
I just don’t see all of our trading partners as some sort of economic “OPEC” who are willing to live or die together.
Trump’s strategy (I believe) is to negotiate deals with individual countries. The one’s running the biggest balances of trade with us have the most to gain by cutting a deal and resuming that trade.
There are two questions: 1) will the short term pain be worth the long-term gain?; and 2) do we have the political will to have this fight until victory?
Our economy is the one purchasing most of the world’s output. If we stop buying their products and switch to domestic production and consumption, how do we lose in a trade war?
We will have some pain initially during the transition, in the form of higher prices, but as production returns home so will career type employment that pays well.
We’ve transformed our economy from a manufacturing based system to service based - and strategically that’s insane. China has built the PLA with our money - THAT HAS TO STOP, or we are going to be facing a larger, more advanced enemy for real, not just in trading.
“Take your free traitor crap elsewhere- and your username is an insult.”
Amen! I knew Ronald Reagan and “reaganaut1” is no Ronald Reagan.
The US govt previously did use tariffs but dropped it as they successfully implemented the income tax
And that opened the door for state and local govt to implement sales taxes.
While working at the Department of State, I wrote a proposal based on using US Food as a political carrot, or weapon have you, to influence UN member states by either withholding US Rice or Soybeans from the Global Markets, or equating simply equating Oil Barrels to fixed valuations of (for example) 5-bushels of Corn when dealing with OPEC. You probably get the point. Hillary's folks were quite upset with the proposal and we went back and forth 3 exchanges. Bottom line they felt the US had a obligation to not use natural resources or food or trade to gain advantage over other world nations. I think Trump understands at the end of the Trade War, my old paper on pegging Oil to Beans or dollars to China-paper will be the final blow to those who unfairly trade with the US. This trade war will be in full effect after the Mid-Terms.
bookmark
IF! The world formed a solid block. Now that right there is something to worry about.
If US tariffs are bad for the US economy, why is no one discussing why country X’s current and retaliatory tariffs are bad for X’s economy?
Rule of thumb?
A country with a massive trade deficit has the least to lose in a trade war.
The VAT is passed on to the buyer. I paid up to 29% on some items I purchased in Europe.
I'm sure that Trump is aware of the fact that in the short term, prices will increase - that's a given. What the anti-tariff hysterics don't seem to be aware of is that supply and demand aren't static and that those upticks in price aren't permanent - i.e. global supply chains can be replaced with domestic ones, and as domestic production increases to meet the demand, those prices will rise, while in the meantime supporting domestic rather than foreign production.
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