China and Germany converge in response to US trade war threats
As Washington squeezes Berlin with tariffs, Beijing beckons
“Trump humiliates Merkel before her Washington visit,” Germany’s financial daily Handelsblatt reports today. Despite urgent pleas from Berlin, the US will not exempt Germany from steel and aluminum tariffs. That’s a small but symbolic slap in the face to Germany.
Meanwhile, Germany is looking to China, and China is opening the door a crack to Germany. Volkswagen announced yesterday an US$18 billion investment program in electric vehicles and self-driving cars with its Chinese joint-venture partners. And China is considering a reduction in auto import tariffs that would benefit German and Japanese automakers, but not their US counterparts.
A look at China’s move to seize the opportunity, via Bloomberg:
“China is considering proposals to slash import duty on passenger cars by about half, a move that’s set to give a lift to luxury-auto makers such as BMW AG and Toyota Motor Corp.’s Lexus unit, according to people with direct knowledge of the matter.
“The State Council, or China’s cabinet, is weighing plans to reduce the 25 percent levy — which has been in place for more than a decade — to 10 percent or 15 percent, said the people, who asked not to be identified as the deliberations are private. An announcement of a decision could be made as early as next month, the people said.
“The move comes as investors fret about a mounting trade war between the U.S. and China. While an announcement could be claimed in some quarters as a concession to President Donald Trump, it may ultimately end up benefiting European and Asian carmakers more than their American counterparts because of China’s outstanding threat to slap an additional 25 percent import duty on U.S-made automobiles.”