p*******m
发帖数: 20761 | 1 By FINBARR BERMINGHAM | SOUTH CHINA MORNING POST and ADAM BEHSUDI 04/17/2019
05:19 AM EDT
Share on Facebook Share on Twitter
This story is part of an ongoing series on U.S.-China relations produced
jointly by the South China Morning Post and POLITICO, with reporting from
Asia and the United States.
If President Donald Trump decides to slap tariffs on the global car industry
, suppliers like Jack Sun, who runs a 30-person operation in northeast China
, would be the first to feel the financial pain.
Qingdao Ray Machinery and Technology doesn’t sell directly to the U.S.
Rather, it exports molds and tools for a Chinese tire company in the Middle
East, which in turn supplies automakers in U.S. and Europe.
Although Trump may think he is aiming his tariffs at big European luxury
brands and Asian giants like Toyota and Honda, the additional duties could
send shock waves throughout a global supply chain, hitting small cogs like
Qingdao Ray particularly hard.
“The U.S. is one of the largest auto markets in the world. If it puts
tariffs on the rest of the world, the impact will be significant,” Sun said
. “It will affect my client first and then definitely me. It is difficult
to find an export market as big as the U.S.”
Such tariffs would harm the world economy much more than the current battle
between Washington and Beijing. The U.S.-China trade war directly affects 3
percent of global trade, but the automotive industry accounts for 8 percent,
according to World Trade Organization figures.
Trump is sitting on an explosive report from the U.S. Commerce Department
that is expected to recommend tariffs as high as 25 percent on vehicles and
car parts on the grounds that such imports threaten the national security of
the United States.
Sign up for Morning Trade
A speed read on global trade news — weekday mornings, in your inbox.
Email
Your email…
Sign Up
By signing up you agree to receive email newsletters or alerts from POLITICO
. You can unsubscribe at any time.
The report was submitted to Trump in mid-February. He has 90 days from then
to decide whether to launch a new chapter in the trade war, although he may
take longer.
If the president ultimately follows through with the recommendations, a
conflict that had been between two countries would go global, drawing in the
European Union, Japan and other auto production hubs that the U.S.
considers allies.
For the U.S., attacking car exports would be an effective way of pummeling
China, which is at the heart of an elaborate and intricate car industry
supply chain. But it would also penalize U.S. companies reliant on Chinese
parts, which are often difficult to source at home and find their way into
America via third nations.
China’s role in the global supply chain
China does not export many finished cars to the United States. According to
data from the Commerce Department’s International Trade Administration, it
sold just 51,062 new passenger vehicles to the U.S. last year, worth $1.3
billion. This was just 0.6 percent of total imports by volume — less than
the amount sold by Slovakia, Spain or Sweden.
But China is the second-biggest supplier of car parts to the United States,
after Mexico, accounting for 12 percent of all imports in 2017, according to
the Michigan-based Center for Automotive Research.
The research group warned that “due to the automotive industry’s reliance
on complex cross-border supply chains, any new barriers to trade will have a
significant impact on the U.S. automotive industry, consumer prices, and U.
S. sales, employment, and economic output.”
Many of those Chinese parts suppliers are already feeling the squeeze as
they grapple with the 10 percent duty on exports to the U.S. that Trump
imposed on Chinese goods based on another section of U.S. trade law, known
as Section 301 of the Trade Act of 1974.
Among those exporters is Chongqing Bona Auto Parts, which sells the full
range of car parts to American buyers.
“Of course there is an impact on our exports from the existing U.S. tariffs
,” said Rita Xiao, the company’s export manager. “The U.S. market
accounts for around 20 percent of our total exports, and our exports have
decreased by around 20 percent since last October” after a big portion of U
.S. duties on Chinese imports took effect.
“Our U.S. clients have requested a lower price, 10 percent off the current
price, which sounds impossible to us. For some products, we can lower the
price a little bit, but 10 percent off is impossible,” she added.
Chongqing Bona is one of hundreds — if not thousands — of companies in the
car-parts sector based near Chongqing. The sprawling metropolis in China’s
southwest is home to Changan Ford, a joint venture of state-owned carmaker
Changan Automobile and Ford Motor Company. It employs more than 23,000
people and sells mainly to the Chinese market.
“If there are new U.S. tariffs on the global auto industry, there will
definitely be further impact on us. U.S. partners and clients from other
countries will all ask for a lower price, which is not feasible,” Xiao said.
Actions that boomerang back to U.S.
The tariff burden has not fallen solely on Chinese companies: U.S.
businesses are also losing out from the 10 percent duty added last year and
stand to suffer more should Trump follow through on new duties on the
automotive sector.
Foreign Parts Distributors, a 105-employee company, mainly imports car parts
from China, where it has various offices employing management staff and
engineers who work with Chinese factories producing steering and suspension
parts.
The company’s import duties soared from 2.5 percent to 12.5 percent in
September last year after the Section 301 tariffs Trump imposed took effect.
Donald Trump
FOREIGN POLICY
Trump vetoes resolution on ending U.S. role in Yemen civil war
By ANDREW DESIDERIO
That increase was a big deal in an industry that “generally works with very
tight margins,” said Kevin Feig, executive vice president of the company,
which was started by his father in 1972 in Miami.
“We and most other companies in our industry are not in a position to just
absorb a 10 percent cost increase without passing it forward,” Feig said.
“We were forced fairly quickly to raise our prices to our customers and in
turn our customers raised their prices to their customers.”
Although other industries have been able to move sourcing out of China to
avoid tariffs, the complexity of the products Foreign Parts Distributors
sells makes that harder.
“I don’t import towels, so it’s not like I can just say, ‘well the costs
went up out of China over 10 percent, so I’m going to buy my yellow towels
from Turkey’,” Feig said.
“I’m dealing first of all with a safety item. If you’re driving 80 miles
per hour on the highway, if your control arm fails, you’re in big trouble,
” he said. “The type of product we work with is not something that’s very
easy just to immediately find alternative sourcing. It takes a great deal
of research and vetting.”
Feig said that thus far, he had not seen the front-loading of export orders
that happened last year, ahead of the potential increase in tariffs on a
broad range of Chinese goods including automotive parts.
His view is that further tariffs would “have damaging ripple effects, not
just in the automotive sector, but throughout the U.S. economy.”
“New cars would be collecting dust on dealer lots, and owners of older
vehicles — badly in need of service to maintain safe operation — would
delay necessary repairs due to the increased cost of replacement parts,”
Feig said.
Jobs not flocking back
The aim of Trump’s tariffs is ostensibly to stop car companies from
producing in or sourcing from China. “Get the damn plants open,” he told a
rally in Michigan in March, the latest in a long line of comments directed
at large carmakers that manufacture overseas.
But, the tariffs have forced some companies to stop building in the U.S. and
buy from China instead.
Brad Kraft, president and CEO of Hopkins Manufacturing, which makes and
distributes vehicle accessories like trailer hitches and ice scrapers, said
existing and potential tariffs had led him to import more from China.
The company, based in Emporia, Kansas, operates plants in the U.S., Canada
and Mexico, but imports many components from China.
It tried to manufacture ice scrapers in the U.S. using foreign-sourced
components but because of the items’ tariff classifications, it has been
cheaper to import finished goods from China.
The complexity of the auto-parts supply chain also means that electronic
components assembled in its Mexico plant contain enough Chinese-made content
to be considered of Chinese origin and therefore subject to a 25 percent
tariff.
“Now we are in a position where we have to move work out of the U.S. and
into China and we will have a lower cost position because the finished good
is not subject to a tariff,” Kraft said. “I shared that one with my U.S.
senator and he had to shake his head.”
Hopkins Manufacturing has a team in Ningbo, Zhejiang province, that does
sourcing, quality control, logistics and other work there. Kraft visited in
March and noticed “a fair amount of apprehension.”
“Our own suppliers are very concerned because they don’t know what will
happen,” he said.
China’s car industry has been in sharp decline amid weaker economic growth
in the nation. Vehicles sales fell for the ninth straight month in March,
according to the China Association of Automobile Manufacturers.
Jerrold Nadler and Elijah Cummings
CONGRESS
Dems launch probe into Trump’s sanctuary cities push
By SARAH FERRIS
During the combined January-February period, when China’s industrial
production slumped to a decade low, car manufacturing was the worst
performer, falling by 5.3 percent.
Separately, a survey by insurance company Coface found that along with the
construction industry, Chinese automotive companies’ invoices are paid
later than those in other sectors. Any further pressure on the sector could
reverberate throughout the Chinese economy.
“If we look at the national retail value, car sales value is around 10
percent of that. The car industry is labor-intensive. It impacts a lot of
things like taxes and employment,” said Patrick Yuan, a Hong Kong-based
automotive analyst with Jefferies, an investment bank.
Still, China remains the biggest car market in the world, and international
companies will not abandon a shot at such a lucrative customer base. Many
have decided to produce in China for consumption in China, taking advantage
of just-in-time manufacturing by having their supply chain cluster nearby.
According to Bill Russo, founder of the Shanghai-based consulting firm
Automobility, tariffs will just accelerate this trend, putting further
pressure on American manufacturing.
“The tariffs are not making companies export vehicles to the market, but
increasing investment in the country,” Russo said. “They’ve weakened
companies exporting cars from the U.S. to China, including Tesla, Chrysler’
s Jeep van, Ford’s Lincoln brand and all of the German [carmakers] who
manufacture their SUVs in the southern U.S.”
Finbarr Bermingham reported from Hong Kong and Adam Behsudi reported from
Washington. Cissy Zhou in Hong Kong and Sidney Leng in Shanghai contributed
to this report. |
|
