Discussion Board

As the trade war continues between the US and China, more and more industries are starting to suffer and/or anticipating losses.  The auto industry is definitely being affected; it is predicted that car prices will go up as a result of the trade war.

Trade Representatives in the US are planning ways to raise Chinese vehicle duties to 40% as this is the tax levied on American-made cars by Beijing.  This tension is not going to be good for consumers and manufacturers going forward.  As the costs increase that can lower the demand and/or hurt margins.  Morgan Stanley's chief US auto analyst is sure that this kind of disruption to the auto industry will lead to inflation.  At this time it happens to be between the US and China, but this can also be the case if it was other pairs such as US and Europe, or Japan.

As a response, General Motors is cutting costs tremendously very soon.  GM announced that they will be cutting atleast 14,000 North American jobs.  This can be problematic for employees, especially since this is the holidays time.  GM is planning for a drop in their business, which is just a prediction but they are taking immediate action.  Analysts are stating that this transition is called Auto 2.0 - structural shifts in the global car market.  GM's strategy is to go through the process now (eliminating jobs) before they start to feel the impact of business going down.  It will be a lot harder to manage both at the same time.

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