The global auto-giants have invested more than $75 billion in the United States and their operations provide livelihood to about 130,000 Americans. But trade tensions may force these companies to reevaluate their strategies related to the United States.
One of President Trump’s goals was to bring down the large trade deficit. The figures report otherwise as trade deficit increased to a five-month high in July, marking the worst in a month since 2015.
The Commerce Department said that trade gap widened for a second consecutive month to reach $50.1 billion. The data for June was revised, indicating the deficit has risen to $45.7 billion. The trade deficit with China trade deficit increased to a five-month high in July
Harley Davidson has shifted its production of Europe bound motorcycles from the United States to escape the additional $2200 tariffs imposed by the European Union (EU). Other examples are Tesla (TSLA – Free Report) and Ford Motors (F – Free Report), which have taken steps to reduce the burden of tariffs imposed on their products imported into China. In August, Morgan Stanley reduced the price target and EPS estimates for General Motors (GM – Free Report) because of the slowdown in China’s markets. Ford publicly announced its decision to avoid the American market for its small China-made vehicle Focus Active, which could have served as a niche vehicle for U.S market.
U.S. automakers in China are severely affected by the trade war between these two countries.
Per a survey released last week by the American Chamber of Commerce in Shanghai and Beijing-based American Chamber of Commerce in China, the U.S. automakers in China have borne the brunt of tit-for-tat tariffs. The initial round of tariffs of $50 billion has affected 80.5% of respondents belonging to the automotive industry while Chinese tariffs affected 75% of them.
Among the three to four industries that are affected by tariffs on both sides, auto is one.
