When you think of groups who might combine forces to make a difference there are certain combos that make sense. The oil industry and the car industry, for example. Environmental groups and PETA might join forces. However, American farmers and German automakers wouldn’t seem to have much in common, at least until this week. But, indeed those are two industries joining forces to caution against a trade war. Gildshire investigated, while Reuters helped with the research.
Luxury carmakers BMW and Daimler joined American ranchers and farmers, alongside Chinese solar and steelmakers this week. They would be amongst the initial casualties in what may well become a global trade war the like of which the world hasn’t seen since the Great Depression. Individual industries such as autos, ag, and tech, expect to be pounded in the fray.
This Wednesday, Daimler sliced its profit forecast. BMW said it was taking a look at its options in the face of the threatened imbroglio over trade.
The initial test of whether a trade and tariff war will indeed start comes in two weeks. July 6 is the date on which President Trump has vowed to enact duties on $50 billion of imports coming to our shores from China.
Beijing, naturally, pledges retaliation. The President responded with his trademark bellicosity, threatening to push even harder in response.
A trade tussle, while the U.S is mired in foreign policy, trade, and immigration battles with allies in Europe and North America, would be hard to prosecute. Fighting with China, the world’s emerging military, and economic power could mean the entire world’s involvement if both sides carry out their threats.
The Chinese leadership, along with Chinese newspapers, made a strong point when it came to the United States and President Trump. They stressed that Beijing would, in fact, strike back if provoked. That said, President Xi Jinping told some foreign company executives in Beijing about plans to press ahead with promised tariff reductions promised in April.
Items such as vehicles have seen pledges of cuts. In May, Beijing said it would lower import tariffs on almost 1,500 consumer goods, starting from July 1.
Obviously, German carmakers are concerned enough to combine efforts with American farmers. Will China’s concessions satisfy the Administration? Only time will tell. But, Gildshire will stay on top of these most crucial negotiations.