Tariff drop a salve for hard-hit traders of US cars

In the Chinese port city of Tianjin, grey market traders of American-made cars, badly stung by a scything trade war and punitive tit-for-tat tariffs, are scrambling to take advantage of an opportunity they fear may prove only temporary.
At a car “supermarket” near the city’s busy harbour, importers said they were rushing to get “Made in America” cars through customs and revving up orders after Beijing temporarily cut tariffs on US autos from January 1.
The activity at the port — after a freeze since China hit US auto imports with a 40 per cent tariff last July — illustrates how ebbs and flows in the protracted trade war between Washington and Beijing are impacting global businesses.
“Our business was harshly hit in 2018. Sales fell steeply and we were forced to hold cars in bonded zones to wait for tariffs to be cut,” said Kevin Li, a dealer at the port whose firm brings in US-made luxury sport utility vehicles (SUVs).
“Now we are discussing with dealers in the US to start importing more cars once again.”
The higher tariffs have hit premium carmakers who import a large portion of the vehicles they sell in China, including Tesla Inc, Ford Motor Co’s Lincoln brand, and Germany’s BMW and Daimler AG, which both have manufacturing in the United States.
Chinese and US trade negotiators have been locked in talks in Beijing last week in a bid to end the trade tensions that have rocked markets. Those talks wrapped up on last Wednesday, with hopes growing that a deal could be struck.
The two countries’ leaders struck a 90-day trade truce last month after talks on the sidelines of the G20 meeting in Argentina, which saw China’s steep levies on autos trimmed back for a three-month period until the end of March.
In the first ten months of 2018, US passenger vehicle exports to China, excluding those for public transport, were just under $6 billion, down from over $8.5 billion in the same period the year before.
Since the middle of last year, when China raised tariffs, US car exports to China have plunged between 35-55 per cent each month versus the year before, far more steeply than in the first half of the year.
Shortly after the Chinese announcement, Tesla, Mercedes-Benz parent Daimler and BMW cut their prices for imported US-made cars to make their cars more affordable.
An official at China’s main car dealers’ association said he expected formal imports by carmakers to revive over the next few months given the lower tariffs. Reuters could not immediately confirm if numbers had already started to climb.
Car dealers at the port, however, said customers had started to return late last month.
“We notice significantly more customers coming since the announcement of the tariff cut on US-made cars,” said Peter Liu, a dealer at the port, who imports cars from the United States including Mercedes-Benz and Land Rover SUVs.
Liu’s firm is offering 10-15 per cent discount to customers to bring in much-needed cashflow after a tough six months with his cars stuck paying fees in portside parking lots to avoid the steep levies.
“The tariff cut on US-made cars has pushed us to now clear our cars parked in bonded zone through customs. We already successfully submitted documents to clear two Benz GLS 450s,” Liu said.
Rival dealer Kevin Li said he was bringing 20 Mercedes-Benz SUVs through customs, making use of the tariff drop “window” to bring in cars even without firm orders. — Reuters

Yilei Sun, Adam Jourdan