A Trump Win on China Tariffs Could Aid Auto Plants in US —Just Not American Ones

Date: Monday, April 23, 2018
Source: Today Tells

President Trump may be able to get China to lower its import tariffs on foreign cars—but it might not help the auto companies he wants to support.

That’s according to Robert Zoellick, who is both a former U.S. trade representative and erstwhile head of the World Bank. Mr. Zoellick, who is now chairman of investment-management firm AllianceBernstein, told The Wall Street Journal in Tokyo that if China’s leader Xi Jinping were to lower car import tariffs from 25% closer to the U.S.’s 2.5%, it would only offer the Trump administration a symbolic victory that wouldn’t aid American car makers much.

“You could easily see Xi Jinping saying, ‘OK, well, I’ll lower the tariff on autos.’ And it would be a great win,” Mr. Zoellick said. But he said it would most likely only help German car makers that export to China from their plants in the U.S.

That is “because the U.S. producers are Ford and GM, and they’ve got their plants in China, so what difference is it going to make? It would make a difference for BMW, and BMW in South Carolina exporting and so on and so forth,” he said.

BMW imports about three in ten of the cars it sells in China, largely because, as a premium brand, it is happy to bear the extra transport costs rather than produce more in China, where it would have to have a joint venture to manufacture. Many of the cars BMW exports to China are made at its plant in Spartanburg, S.C.

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