The Auto Industry Gets Caught in the Midst of the Trade War

The Auto Industry Gets Caught in the Midst of the Trade War

Business

The agents of the customs department in Shanghai have not allowed the release of a shipment of Mercedes-Benz SUVs, which are made in America because they have described the situation as a risk to safety.

The Mercedes models of GLE and GLS have problems with their rear brakes, which the concerned authorities want to get fixed before they get allowed entry into the country. Still, the time at which this move has been taken, just few days after Trump administration had raised their stakes in the ongoing trade war with China, thereby triggering the Chinese Govt to hit back with new slew of tariffs on all those products that include autos, which are made in America, has certainly made people to raise their eyebrows.

Head of Auto Trends Consulting, who was also a Wall Street analyst in the automotive segment for a long time, Joe Phillippi said that the move reflected that it was nothing but part of a tit for tat response, in a war that has been escalating and which could potentially reach dramatic levels.

The US Administration has to believe that the dispute with the Chinese counterpart will not last for a long time. In case it leads to quite a sharp fall in the exports of US automobiles, it could take a heavy toll on jobs for the next few months. Then that would in all probability, tend to backfire on Trump as well as on the Republicans as they would not like to cause harm to the heartland of the industry, especially on the run-up to the elections for the mid-term. As far as China is concerned, the growth in dispute could very well shut out all the plans for their auto industry, which has been lurking all along with the intention of more exports.

As a response to the latest slew of tariffs that got levied by the US Administration, China had announced levying 25 percent tariffs on goods made by the US, worth $16 billion. That also included nearly $10 billion in automobiles, which motorists of China were expected to get hold of this year.

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