A multitude of topics, including new tariff policies, are being discussed during trade talks between China and the United States. Specifics have yet to be revealed as business experts from their respective diplomatic corps negotiate under highly confidential conditions.
Uncertainty over tariffs pertaining to completed vehicles and auto parts shipments is of particular interest to industry executives as the bargaining continues.
“Things are in a state of flux regarding these tariffs,” notes Margaret Beck, spokeswoman for the Motor & Equipment Manufacturers Association (MEMA).
“We hope the U.S. can work together with China, accelerate negotiations and make concrete efforts towards the goal of terminating trade tensions,” says China’s State Council, or cabinet, as reported by the South China Morning Post.
China has put a hold on its tariffs, a move aimed at “continuing to create a good atmosphere for the ongoing trade negotiations between both sides,” according to the State Council. “It is a positive reaction to the U.S. decision to delay tariff hikes and a concrete action adopted to promote bilateral trade negotiations.”
“We don’t actually know what will happen with the trade negotiations,” says Bernard Swiecki, senior analyst at the Center for Automotive Research (CAR) in Michigan. “In all likelihood things will get more expensive; either higher prices from China or manufacturing will be done somewhere else,” as in other nations offering similar lower-wage workforces.
President Donald Trump has been expressing confidence that a satisfactory agreement will ultimately be reached. China is temporarily suspending an additional 25 percent tariff on 144 U.S.-made vehicle models and their respective parts. Another 5 percent tariff applied to 67 other imported American auto parts is also being held in abeyance, while a 15 percent duty on all auto imports remains in place.
MEMA “is pleased to learn that the Trump Administration has reached what reports call ‘a truce,’ which could reduce the risk of an ongoing trade dispute with China. We are encouraged by reports that President Trump has agreed to hold off on new tariffs and that China President Xi Jinping has pledged to increase Chinese purchases of American products,” according to the organization. “We hope that this will serve as a starting point for additional negotiations, and an agreement in the future that will allow U.S. companies to remain competitive in a global marketplace while protecting intellectual property rights.”
Placing tariffs “on hundreds of billions of dollars worth of imports from China will serve only as a tax increase on the American public and consumers by increasing the costs of a new car or truck and of maintaining the hundreds of millions of vehicles currently on the roads,” MEMA contends.
In addition to “repeatedly and consistently” pointing out its position to Trump and the negotiating team, “MEMA also has repeatedly urged the Administration to protect intellectual property in more effective and targeted means rather than broadly applied tariffs. The protection of intellectual property is a critical issue for MEMA and its members, and for decades MEMA has advocated for strong global protections of IP investments.”
“The rest of the world agrees with the United States – and they have for quite a while – that the Chinese are stealing intellectual property,” says Dr. Marina Whitman, professor emerita of business administration and public policy at the University of Michigan, who was also chief economist at General Motors and the automaker’s first female group vice president.
A preliminary pact between the two nations reportedly consists of about120 pages addressing issues such as the forced technology transfers associated with having to establish joint ventures with Chinese firms, the poaching of intellectual property and other troublesome trade barriers not directly connected to the tariff tiffs.
From the perspective of negotiators on the American side, “what they’re really concerned about is the way the Chinese are treating intellectual property and enforcement” guarantees of a subsequent agreement. “From practical experience they do not trust the Chinese to deliver on what they promise,” Whitman tells Aftermarket Business World.
“Recently there’s been a lot of emphasis on Chinese scholars in the United States because they were using their work to get access to intellectual property,” she points out. “It is clear that they want to become a leader in high-tech industries. People have suffered from ‘China shock’ when China entered the world market.”