China Hits U.S. Auto Sector With Retaliatory Duties

China retaliates swiftly to the Trump Admin.’s June 15 imposition of 25% duties on Chinese automotive exports, announcing matching 25% retaliatory duties the following day on a wide range of U.S. exports of cars, SUVs and off-road vehicles, including hybrids and electric autos.

The Customs Tariff Commission of the State Council of China says duties also will be imposed on U.S.-made transmissions and trucks weighing more than five tons.

The U.S. would pursue additional tariffs if China retaliates, Trump said in a June 16 statement prior to China’s announcement of retaliatory tariffs.

The extent of this trade is vast, with the U.S. exporting $10.6 billion worth of cars and SUVs to China in 2017, with $1.5 billion worth of electric vehicles of all kinds also being sold, according to international trade data.

Last year, $676 million worth of U.S.-made transmissions were exported to China.

Sales of China-made public transport vehicles to the U.S. generated $26 million worth of receipts in 2017. 

The new tariffs announced June 15 by U.S. Trade Representative Robert Lighthizer involve $50 billion worth of Chinese exports now subject to 25% duties, in addition to any other duties already in effect.

They will cover China-made exports of a wide range of automobiles and parts. The White House has said these tariffs will take effect soon, although no date has been announced.

The affected products were selected from an earlier shortlist. However, Lightizer in the next few weeks will consult on expanding these duties to include further tariff lines, which would include some important parts, notably electric-vehicle batteries.

Equipment covered by the new U.S. duties include petroleum, diesel and electric cars, vans and buses. Also affected are cargo trucks (both on- and off-highway), firefighting vehicles, concrete mixers, tractors and works trucks.

In addition, the duties cover China-made ball bearings and insulated ignition wiring sets and capacitors. Ball-bearing sales are significant: China sold $349 million worth to the U.S. in 2017, as well as $25.6 million worth of copper winding wire used as insulated electric conductors.

 Lighthizer says the duties are designed to impede Chinese exporters from stealing American intellectual property and using it to make cheap technology to sell to the U.S., reducing the earnings of their U.S. competitors.

“We must take strong defensive actions to protect America’s leadership in technology and innovation against the unprecedented threat posed by China’s theft of our intellectual property, the forced transfer of American technology and its cyberattacks on our computer networks,” Lighthizer says.

In announcing new duties of its own June 16, the China tariff commission says, “The U.S. measures violated the relevant rules of the World Trade Organization.” It says the U.S. tariffs are “contrary to the consensus reached in the Sino-U.S. negotiations” on solving ongoing trade disputes between the two countries.

“It seriously violates our legitimate rights and interests and threatens the interests of our country and people,” the commission says.

As for future additional U.S. duties under consideration, a shortlist includes China-made aluminum stranded wire and cable, as well as storage batteries used as the primary source of electrical power for EVs.

See current duties: https://ustr.gov/sites/default/files/enforcement/301Investigations/List 1.pdf

See shortlist for additional duties: https://ustr.gov/sites/default/files/enforcement/301Investigations/List 2.pdf