Ford Sales Plummet in China and New Tariff Hit Is Yet to Com

Ford Sales Plummet in China, and New Tariff Hit Is Yet to Come

Link: https://www.wsj.com/articles/ford-sales-plummet-in-china-and-tariff-hit-is-yet-to-come-1531304583

Ford Motor Company’s sales in China have fallen by 26% in the first half of 2018, and the current trade war with China may make matters worse. However, General Motors has seen sales increase by 4% in the first half of 2018. That said, the US government plans to impose tariffs on $200 billion worth of Chinese goods in addition to the scheduled tariffs of $50 billion. Chinese consumers do not currently hold anti-American sentiment, but this could change over time. Ford and General Motors have partnerships with Chinese automakers, and they will avoid the tariffs because they produce many of their Chinese-market cars in China. However, imported vehicles by these brands will be subject to tariffs.

Do you believe that the Chinese market will force out American automakers, or will they do business as usual until there is a resolution?

Would you consider domestic alternatives to items you often use if Chinese imports become too expensive in the US?

Solution

There a possible trade war between USA and China as China has also imposed tariffs on imports from USA which was started by USA.The various companies are involved in changing their production plans due to changes in tariff structure.

The trade war may lead to changes in the mindset of the Chinese consumers to avoid US products which are not currently prevailing. The GM Company will not be directly impacted by the tariffs imposed by China as it makes most of its sales in the country.

The import tariffs will also impact the companies in USA as the goods are imported for continuing the US operations. The tariffs will lead to the higher costs and the plans are to be changed at macro level for companies.

The sales of the automakers have seen a dip in the Chinese market. It would not take long to change the people’s sentiments. And if it happens, the American automakers will not be able to continue its operations in China for long.

The Chinese market is very critical to the growth of auto making companies. US car market is built on stability and consumer confidence. The trade war may prove harmful and there is possibility that Chinese market will force out the automakers in long run.

2.

The people purchase the Chinese products when they are cheaper than the domestic products. Sometimes, the quality is compromised because of low prices of Chinese products. If the tariffs are imposed on imports from China, it will raise the prices in US market. The US consumers will definitely prefer the domestic products for purchase.