Trade War Is Giving BMW, Ford and Tesla a Whiplash in China

Trade should be as free as humanly possible. And it should be as simple as possible. Unfortunately Trump does not seem terribly interested in free or simple international trade.

Also, free trade agreements, should be 3 pages long max, if indeed they need to be codified at all. What has passed for “free trade” in the past has often been, to a large degree, crony trade. The Trans Pacific Partnership, which Trump killed was an example of this.

Still it’s not like flat out, in your face, neo-mercantilism is better.

(From Bloomberg)

For BMW AG, Tesla Inc. and other global automakers whose future is ever-more dependent on China’s burgeoning market, any gains from lower import tariffs this week will likely be short-lived — thanks to President Donald Trump’s trade war.

After decades of pleading for easier access to the world’s biggest car market, manufacturers finally saw duties on overseas imports almost halved to 15 percent on Sunday. But the reprieve for producers of those models — if they are built in the U.S. — is set to end in five days, when a retaliatory 25 percent levy makes them more expensive.

Trump’s tit-for-tat trade squabble with China threatens to undo years of lobbying by carmakers and drag Europe’s leading luxury brands into the fray because of decisions that were made when global manufacturing and exporting were buzzwords. Now, the uncertain implications of a tariff whiplash are unnerving dealers and consumers in a country where a record 24 million vehicles were sold last year.

“It is a nightmare to have the 25 percent additional duty,” said Wang Rongzhen, deputy general manager and an investor in Yan’an Jinchi Feike Auto Sales and Service Co.

Pity the Chinese car salesman caught in the middle of this squabble with a new mortgage and a child on the way. Or the guy making fenders in Arkansas in the same situation.

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