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Tesla Trade Agreements

As reported on Tuesday by the Chinese news site Xinhuanet, the Chinese government will drastically increase the size of its Experimental Free Trade Area (FTZ) in Shanghai to cover Tesla`s new “Gigafactory” in Lingang, an industrial area on the outskirts of Shanghai. Over the past 12 months, Tesla has repeatedly reviewed the price tags of its U.S. electric cars in the Chinese market to address the impact of Beijing`s tariffs on U.S. products amid a bloody trade war between the United States and China. The United States and China have been embedding months of trade disputes after Trump took office in 2017, and despite a “phase one” agreement signed earlier this year that marked a partial ceasefire in the conflict, additional tariffs of 25 percent remain on the $250 billion counter-value of Chinese goods. Currently, all cars that import Tesla to China are subject to a 40% tariff, which consists of a regular 15% tariff that has been in effect for some time and an additional 25% tariff imposed after the United States began its trade war with China. Does “Immediately” mean the removal of the 25% tariff and, if so, when? Does this mean that the 15% tariff on imported vehicles will also be abolished? We don`t know. BMW is another relatively small automaker that is hit by China`s new tariffs. BMW seems to have developed its manufacturing strategy for a free (or freer) commercial world. The company builds German sedans and SUVs in America.

Vehicles cross each other over the sea. Imports and net exports are low, but with new tariffs, the impact will be considerable. Stock markets operate with two emotions: fear and greed. It`s according to the old merchants who saw it all, and then a few. There is no better evidence of this wisdom than the turbulence in global stock markets before and after last weekend`s G20 conference in Buenos Aires. Finally, Tesla also hopes to manufacture vehicles in the new Gigafactory for countries outside China, Musk said, which could prevent him from some trade problems during President Donald Trump`s ongoing trade war. Since the trade war intensified in July 2018, when the United States announced a proposed tariff on $200 billion worth of imported Chinese goods, the Dow Jones Industrial Average has increased by about 5%. On the other hand, the Russell 3000 Auto-Auto Parts Index is down about 21%.

However, as the trade war gets even worse, Tesla may be able to calculate the impact on tariffs through a new development in China`s domestic policy. In its case, Mercedes accused the Trump administration of “an unprecedented, borderless and unlimited trade war that affects more than $500 billion in imports from the People`s Republic of China.” The taxes were introduced as part of Washington`s efforts to wean its Chinese technology manufacturers and reduce the gaping trade deficit with China. Before the meeting, fears of an escalation of the trade war between the United States and China led the Dow Jones Industrial Average to fall dramatically and wipe out virtually all profits in 2018. This weekend, a tweet from the US president, which appeared to promise a solution to the conflict, blew up the DJIA.