Arthur J. Villasanta – Fourth Estate Contributor
Dearborn, MI, United States (4E) – The Ford Motor Company and General Motors Company, America’s two largest motor vehicle makers, brace for far worse losses on account of falling exports to China.
Both are already reeling from losses of more than $1 billion apiece from president Donald Trump’s aluminum and steel tariffs he imposed last March.
Ford and GM also dread Trump pushing through with his threat to launch a third front in his global trade war. Trump wants Congress to support his proposed 25 percent tariffs on vehicles imported from major traing partners, such as Germany. Like China, the European Union said it will retaliate if Trump does so, imposing heavy tariffs on U.S.-made vehicles.
The U.S. car industry shipped some 250,000 vehicles to China in 2017. Vehicle sales were initially projected to grow beyond this total because of strong demand for SUVs. Then came Trump’s trade war.
BMW, the largest exporter of American-made vehicles to China, has been planning to boost production of utility vehicles from its Spartanburg, South Carolina plant with the launch of its new flagship, X7 SU. Most of this production will go to China.
On the oher hand, Volvo has earmarked half of the vehicles it will produce at its new Charleston, South Carolina, plant for export. Many of these vehicle also bound for China.
“We … thought Charleston could build cars for China,” said Volvo’s global CEO Hakan Samuelsson. “That will not work.”
Samuelsson said Volvo will consider shifting some production from Charleston to China, a move that will necessarily mean slashing production and firing hundreds of employees. Industry analysts said other carmakers might follow Volvo’s lead.
Industry officials have also been forced to admit that nothing positive for their industry came out of the much-hyped Trump-Xi talks in Argentina on Dec. 1..
“It doesn’t seem like anything was actually agreed to at the dinner and White House officials are contorting themselves into pretzels to reconcile Trump’s tweets (which seem if not completely fabricated then grossly exaggerated) with reality,” said one investor note from JPMorgan.
Trump’s National Economic Council adviser Larry Kudlow admitted a deal “hasn’t been signed and sealed and delivered yet.”
On the other hand, Trump continued to lie, this time tweeting that: “The negotiations with China have already started.” He alleges his team will be “seeing whether or not a REAL deal with China is actually possible. If it is, we will get it done.”
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