German Carmakers to Profit Most From Trade Truce

After the United States and China agreed on a phase 1 trade deal last week, both countries announced the suspension of additional tariffs set to take effect on December 15. While the U.S. halted plans to impose additional tariffs on $160 billion worth of Chinese consumer electronics and toys, China called off retaliatory tariffs on several products including corn, auto parts and passenger cars.

The suspension of Chinese tariffs on American-made cars will be welcomed by U.S. automakers, with the sigh of relief particularly notable at Tesla and Ford. Interestingly however, German carmakers had the most riding on the trade conflict, with BMW and Daimler (Mercedes’ parent company) the surprise leaders in terms of cars built in America exported to China.

According to LMC Automotive data cited by CNBC, BMW exported 77,000 American-built cars to China in 2018, edging out Daimler, Ford and Tesla. The BMW X5, manufactured at BMW Spartanburg in Greer, South Carolina, was the best-selling U.S. car in China last year, selling 53,000 units. The “Bavarian” SUV was followed by the Mercedes-Benz GLE and GLC , both manufactured at the Mercedes-Benz U.S. International plant located near Vance, Alabama.

While most major car manufacturers doing business in China have local production facilities and only partly rely on exports from overseas, Tesla is currently exporting all of the cars it sells in China from the United States. To reduce its exposure to possible tariffs going forward, Tesla broke ground on its first overseas factory in Shanghai in January, aiming to build a more affordable version of the Model 3 for the greater China region there.