The tariff escalation between Washington and Beijing has reached new heights in recent days. In the United States, imports of Chinese products are taxed at a rate of 145%. In retaliation, China has decided to raise its customs duties by 125% — the country will not go any further, the level of taxes being such that no more imports of American products are really possible from now on.
Tesla collateral victim of an out-of-control trade war
This trade war will claim victims, starting with Tesla. The car manufacturer, whose boss is none other than Donald Trump's right-hand man, has in fact decided to stop the costs in China for the Model S and Model X, its two highest-end vehicles. These cars are not produced on Chinese soil, but imported directly from the United States; Consequently, they are now subject to insane tariffs.
Chinese drivers who absolutely want to get their hands on one of these models should act quickly before stocks completely evaporate. However, given the asking prices (which exceed $100,000 for a Model S), these vehicles must not be huge best-sellers. In terms of volume, they only represented 2,000 units sold in China last year, compared to more than 660,000 for the Model 3 and Model Y.
Tesla manufactures Model Y and Model 3 vehicles in its Shanghai gigafactory. Consequently, the cars that come off this production line are not subject to any customs duties and therefore continue to be sold in China. This new front in the trade war between the two largest economic powers on the planet is a severe blow for the manufacturer, which is also facing extremely fierce local competition, particularly from BYD.
This is compounded by the disenchantment with the brand in Europe and the United States, with sales plummeting across the globe.
Source: Bloomberg
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