Question

One aspect of international trade that has seen quite a bit of coverage since the election of Donald Trump is that of tariffs. While the use of tariffs as a means of engaging in economic and geopolitical policy is certainly not new, the Trump Administration has opted to use them in a manner much different than what Americans are accustomed to seeing.

Your assignment is to read this article from the Washington Post and in 250-500 words explain how you feel American auto manufacturers will respond to the continued use of tariffs on Chinese imports into the United States.

Answer 1

According to World Trade Organisation figures the US China trade war directly affects 3% of global trade, but the automotive industry accounts for 8% .As per the report of us department of Commerce ,the tariff as highest 25% on vehicles and car parts on the grounds that such import threat in the national security of the United States which have caused A reduction of Orders from clients and definitely affect automobile industry in the United States quite negatively .

According to US based Centre for Automotive research China is the second biggest supplier of car parts in the United States accounting for 12% of all imports as per the 2017 figures . Due to the automotive Industries Reliance on complex cross-border supply chains, the new barriers to trade have a significant impact on US automotive industry, consumer prices, us sales employment and economic output .

The aim of imposing tariff was to stop car companies from producing in or Sourcing from China and to start manufacturing in United States itself.But the tariff have forced some companies to stop building in the US and buy from China instead not the raw materials but directly the finished products .The the high tariff duty on imports have led to increase in prices of the raw material which in turn have increased the prices of the final product in the automotive industry leading to decline in their sales in the Global market, negatively affecting exports of the automobile industries of the US .

As per the reports the new cars are are standing in dealer lots due to drop sales and owners of older vehicles are avoiding necessary repairs due to increase cost of Replacement parts .With this kind of supply chain disruptions the the US car manufacturers are currently striving towards quality, accuracy and timeliness in manufacturing of their products. They have started to replace there suppliers with onshore alternative however this radical restructuring will take around 5 to 10 years making many companies a significant credit risk over the long-term. This kind of restructuring have further increased the cost of the the finished products thereby inclining the consumers to purchase less leading to drop off sale volume in both domestic and global markets.