Are European And Asian Cars Safe From US Tariffs?

How far will this trade war go?

For months now, the ongoing saga of US tariffs on foreign cars has been causing turmoil within the automotive industry. China has already been hit with tariffs (affecting GM cars including the Buick Envision and Cadillac CT6) and the European Union fears it may be next.

After having numerous discussions regarding trade, Bloomberg reports that the Trump administration will hold off on imposing new tariffs, at least for now. Two people familiar with the matter said President Trump met with his top trade advisors at the White House to draft a report on the impact of car imports. After reading the report, the administration said it wasn't ready to impose new tariffs, though the report will be subject to change.

The Commerce probe was prompted by section 232 of the Trade Expansion Act, which covers the importation of automobiles, SUVs, vans, light trucks, and auto parts. Commerce Secretary Wilbur Ross is currently working on the probe and has until February 2019 to deliver his results to the president, who will have final say over any tariffs. If President Trump does decide to impose tariffs, they could be as high as 25%.

Automakers, both foreign and domestic, have warned of what could happen if these news tariffs are imposed, with Volvo, for example, already claiming they have caused strain on the production of the US-built Volvo S60. According to the National Automobile Dealers Association, a 25% tariff could increase the price of US-built cars by up to $2,270 and foreign-built cars by up to $6,875.

As of now, any tariffs on the EU have been put on hold. Earlier this year, President Trump agreed not to impose tariffs on Europe until a deal was reached. "We are under the assumption that is still valid," said European Union Trade Commissioner, Cecilia Malmstrom, who is in Washington DC this week to speak to US Trade Representative, Robert Lighthizer. We hope the two sides can reach a deal to avoid potential price hikes across the automotive industry.

China Lowers Trade Tariffs On Foreign Vehicles And Auto Parts

Donald Trump must be ecstatic.

The United States and China have been slowly creeping towards a trade war, which has effected the cost and availability of automobiles. Not only has China imposed a 25% tariff on foreign cars, it has also held several cars at port. The 25% tariff has effected GM, which produces the CT6 hybrid in China. The high tariffs have also greatly impacted European automakers, although the issue is about to improve. According to Reuter's Adam Jourdan, China will cut its tariffs to allow for greater access to its enormous automotive market.

Starting on July 1, 2018, the tariff will be cut from 25% to 15% for most vehicles. The Chinese Ministry of Finance said in a statement that the move is to spur development in the local auto sector. Initially, the move will mainly help premium brands such as Audi, BMW, Mercedes-Benz, and Tesla. BMW said this is a "strong signal that China will continue to open up," and Audi said it was looking forward to "further liberalization and opening" of the Chinese market. A Nissan executive also added that the "Benefits are huge for our business, especially Infiniti." The German cars will be the biggest beneficiaries, due to the sheer number of cars they sell.

The reduced tariffs will help foreign automakers compete with local Chinese automakers on price. Toyota said it would reduce prices on cars that benefited from lower tariffs in order to be more competitive. China will also reduce the tariff on auto parts from 10% down to 6%. Donald Trump has been opposed to trade tariffs with China, so this news should make him very happy. US trade talks with China will continue, with working plans to eliminate China's long-standing rules on foreign ownership of businesses.

GM Responds To Tariffs That Could Stall Envision, CT6 Plug-In Imports

GM is caught in the middle of Trump's trade war.

General Motors has to deal with new tariffs on cars it imports into the United States from China after Robert Lighthizer, US trade representative, announced a new batch of trade measures, highlighted by a 25-percent tariff on Chinese-made cars. The move doesn’t affect any of China’s domestic auto companies because none of them actually sell cars in North America. In fact, it’s probably going to end that little experiment before it even begins. General Motors, however, will be affected.

Two models, the Cadillac CT6 Plug-In Hybrid and the Buick Envision crossover, are built in the People’s Republic and shipped to America. Both will now face a new 25-percent tariff, matching China’s penalty on US built vehicles. As a result, both will see their base prices increase by several thousand dollars. The old tariff was 2.5 percent. “We continue to believe both countries value a vibrant auto industry and understand the interdependence between the world’s two largest automotive markets,” the company said in a statement. “We support a positive trade relationship between the US and China, and urge both countries to continue to engage in constructive dialogue and pursue sustainable trade policies.”

In 2017, GM imported 29,878 Envisions into the US from China, accounting for 17 percent of Buick’s total sales. Crosstown rivals Ford also released a statement encouraging the two nations to hold more constructive discussions as the automaker plans to import the 2019 Focus from China—if it doesn’t kill the model altogether.