Michigan producers urge against China trade war
Detroit automakers and Michigan agriculture groups are urging the Trump administration to resolve differences with China without escalating a trade war, after that country threatened tariffs on additional U.S. products, including cars, auto parts, chemicals, soybeans, corn and beef.
The latest retaliatory threats come after the Chinese government warned of 25 percent duties on a list of 106 products from the U.S. The move is the latest ratcheting of tension after President Donald Trump directed U.S. officials to impose tariffs on $50 billion worth of Chinese imports last month, citing an “out of control” trade deficit.
Although most vehicles sold by Detroit automakers in China are built in that market, Ford Motor Co. exported more than 4,000 Mustangs to China last year. Tesla Inc. sold nearly 15,000 cars there last year. German manufacturers BMW and Daimler AG could be hit by duties on luxury cars built in the U.S. and shipped to China.
Not only that, cars built by Detroit carmakers in China and shipped to the U.S. are vulnerable to tariffs threatened by Trump: General Motors Co. builds its Buick Envision compact SUV in Shanghai; the plug-in version of the Cadillac CT6 is built in Jinqiao.
The Michigan Pork Producers Association says about one-quarter of the pork sold by U.S. producers is exported. That includes some of the 2.5 million pigs raised on 2,000 farms across the state.
Mary Kelpinski, CEO of the pork producers’ group, said uncertainty over the future of the North American Free Trade Agreement and possible tariffs by China are disrupting markets.
“Farmers are already feeling the impact of trade disputes in the futures market,” she said in a Wednesday email. “We are very hopeful for a quick resolution. We cannot afford a trade war.”
Soybeans, meanwhile, are Michigan’s top food export, with $448 million of product sent out of the country in 2015. The Michigan Soybean Association urged leaders Wednesday to “resolve differences without escalating the current trade dispute.”
“The tariffs announced by China will lead to real money lost for farmers that they won’t be able to reinvest in their farms or spend at local equipment dealers, restaurants or movie theaters in rural communities throughout the nation,” said Dave Williams, president of the state soybean group. “This situation is entirely preventable and must be resolved.”
Automakers similarly reacted to the Chinese pronouncement with appeals to both sides to find a solution.
“We encourage both governments to work together to resolve issues between these two important economies,” Ford Motor Co. said in a statement.
General Motors Co. added: “We support a positive trade relationship between the U.S. and China, and urge both countries to continue to engage in constructive dialogue and pursue sustainable trade policies. We continue to believe both countries value a vibrant auto industry and understand the interdependence between the world’s two largest automotive markets.”
Fiat Chrysler Automobiles US LLC declined comment, as did Tesla.
Michigan’s chemical sector is a $16 billion annual industry, supporting more than 100,000 jobs in the state, according to the Michigan Chemistry Council. The state’s chemical industry exports $4.5 billion annually, making it the third-largest export sector in the state. China is the third-biggest export market for U.S. chemicals, after Canada and Mexico. In 2016, U.S. chemical exports to China totaled $10.6 billion.
The council said more than 40 of the 106 proposed tariffs announced by China would be on chemicals or plastics materials. Chemicals like polycarbonates, epoxy resins and acrylonitrile are used to make automotive parts as well as electronics, the group said. So even though the proposed tariffs may have only a slight impact on U.S.-made cars, they will affect other companies that supply Chinese manufacturers, the group said.
DowDupont Inc. didn’t respond for comment Wednesday. But last month Jim Fitterling, chief operating officer of Dow Chemical Co. in Midland, said tariffs proposed by China could total hundreds of millions of dollars for operations. To avoid those duties, he said the company was considering Canada or Argentina for expansion instead of the U.S.
President Trump tried to downplay the risk of a trade war Wednesday.
“We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S. Now we have a Trade Deficit of $500 Billion a year, with Intellectual Property Theft of another $300 Billion,” he tweeted. “We cannot let this continue!”
Trump added in a subsequent tweet: “When you’re already $500 Billion DOWN, you can’t lose!”