China-US Trade Tensions: US and foreign automakers to feel pain of tariffs

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02:44

Caught in the crosshairs of China-US trade tensions is the US auto industry. Part of China's retaliation to US tariffs will target American-assembled cars. As our Zheng Yibing reports, China's counter-duties will not only impact American automakers, but also foreign car brands ASSEMBLING their vehicles in the US.

It's been challenging times for many Chinese car importers.

The reason, rising China-US trade tensions.

Import dealers have stopped stocking US cars or foreign cars assembled in the US, to brace themselves for a tit-for-tat escalation in China-US trade frictions.

LI YONG, SENIOR FELLOW CHINA ASSOC. OF INT'L TRADE "The retail price of American cars will be increased substantially. So, that is going to impact the choice of consumers, their purchase decisions, and probably will lead to a reduction of sales."

Just within a week, China first cut tariffs on all imported automobiles from 25 to 15 percent. But Beijing said it will slap an additional 25 percent levy on American products, including US-made cars. That means a total of a 40 percent of tariff on American autos. So, with heightened trade tensions between the world's two largest economies, who is going to win?

LI YONG, SENIOR FELLOW CHINA ASSOC. OF INT'L TRADE "That is going to be very counter-productive, it will hurt the US auto industry for sure. Of course, the loss would also affect other countries. So it's a conflict that nobody is going to win."

According to the China Automobile Dealers Association (CADA), last year, China imported some 280,000 US vehicles, or 22 percent of China's total imported cars, while only some 53,000 Chinese cars were exported to the US, just five percent of the total.

However, China's export of automotive components to the US totaled 17 billion US dollars, taking up 25 percent of the total, while the reverse number was 2.8 billion US dollars, taking up just 7.2 percent.

Analysts say that in the long run, nobody is immune to losses if trade tensions continue to worsen.

In this trade war, brands from other countries are also involved. Some vehicle models from countries like Germany and Japan would be affected in their sales in China for they have production lines in the US. The 25 percent levy also applies to them.

And, it's not just less cars shipped out of the US, analysts warn that companies might shift their production lines from the US to other countries.

ZHENG YIBING BEIJING "Beijing said that slapping new tariffs in fact strikes the companies not only from China, but also US itself and other countries. And many sides, including those in the auto industry hope to avoid frictions, and protect global free trade and multilateralism. ZHENG YIBING, CGTN, BEIJING."