Did the Trade War between China and the US really end? The answer to this question is quite simple — No.
Why you may ask? Ever since the beginning of the Covid-19 pandemic, both governments began playing a blame game. Yes, again. A heavy 25% import taxes on Chinese equipment has been imposed in September 2019 by the US government and it’s now crippling the automobile industry.
As a response, auto manufacturers importing or producing various automotive components in China like Volvo, Ford, and Mercedes-Benz filed rigorous lawsuits against the US government. Tesla also recently jumped on the bandwagon with Musk being very outspoken in this regard. Tesla’s demand is quite straightforward: the EV manufacturer wants nothing less than the complete eradication of the tax imposition. And it does not end there. Tesla even stretched it to the extent as to ask for a full refund with interest.
It’s one heck of a lawsuit that the US government now has to face.
Custom duties imposed by the US have severely affected the valuation of many car manufacturers and they are in no mood to accept any further losses. With most manufacturers trying to establish plans to manufacturing their own electric vehicles while reducing the overall cost of their vehicles, they are in no position to compromise.
Volvo, being a subsidiary of Chinese-owned Geely Automobiles, has also filed a lawsuit against the US Government and a chain reaction followed. The Chinese side of the story however is that the US is preventing China from becoming a global economic power, just as China is about to start exporting some of its vehicles in the US market. Coincidence? I don’t think so…
On the other hand, even German automobile giant Mercedes-Benz possesses a minority stake of Chinese company BAIC. They are clearly tired of resisting the blows of the revived trade war which prompted them to follow suit as well. According to Volvo, the US government sabotaged net imports worth up to $500 billion.
US President, Donald Trump, time and again has rallied against the unfair trade practices of China. However, since most car manufacturers now have interests in Chinese companies and also rely on Chinese part manufacturers and suppliers, keeping high tariffs in place may significantly harm said companies.
Furthermore, taking into account the current Covid-19 situation, with cases increasing in many countries these days, the future of the automotive market has never been as uncertain before. Adding import taxes significantly impeding the profitability of businesses already struggling seems like adding insult to injury.
To be continued…