China Temporarily Reduces US Auto Tariffs
▶ China reportedly plans to slash auto tariffs — a huge win for Trump — and auto stocks are moving: Shares of Fiat Chrysler, General Motors and Ford jump in intraday trading on reports that China is moving toward cutting tariffs on autos made in the U.S. https://t.co/HuWxLYz2Nh
— FinanzLinksASIA (@FinanzLinksAsia) December 11, 2018
This past Friday, China confirmed that it will temporarily cut tariffs on vehicles made in the U.S. Starting Jan. 1, the tariffs will drop from 40 percent to just 15 percent, which is the current tariff associated with vehicles made in other countries, per CNN. Additionally, China will also suspend the 5-percent tariff it had been imposing on 67 auto parts.
Good news for GM and other American OEMs
The original tariffs resulted in significant losses this year for major OEMs like Daimler and GM. Despite the short-term nature of the tariff lift, it promises to give these automakers a healthy period to regain sales in the new year. So, GM sales in the early part of 2019 should increase to help make up for the sales slump during the third quarter of this year.
Chinese consumers are particularly fond of Cadillac models, as indicated by 2017’s surge in sales. GM also debuted the XT4 in China before it did so in the U.S. In late November, Cadillac launched the 2019 version of the CT6 in this country, as well. Buicks are also popular with Chinese drivers. So much so that Buick designed its Envision model primarily for this market. There’s also a growing demand for electric vehicles (EVs) in China. GM has positioned itself to take advantage of this marketing trend, by setting a goal of releasing 20 new EVs in China by 2023.
Considering that China is currently the world’s largest automobile market, what happens after the three-month tariff lift will largely impact the course of 2019 OEM sales in this region. We anticipate more news in the days ahead as China and the U.S. work out the details of a more long-term plan for helping ease trade ware tensions.
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