Could some Ohio-based factory workers pay the price?
The third generation Acura RDX has just arrived and production is taking place this very moment in East Liberty, Ohio. But according to the Nikkei Asian Review, Honda will soon no longer export the RDX from the US to China because of the ongoing trade war between the two countries. It’s simply not worth it and passing the cost (at least some of it) of the 40 percent tariff down to the Chinese customers is not a good option.
The solution? Honda, like some other automakers, will switch to local Chinese production of a new version of the RDX specifically for that market by the end of this year. Conveniently enough, Honda already builds vehicles in China through two joint ventures it previously set up with Guangzhou Automobile Group and Dongfeng Motor Group.
Hondas are also quite popular in the world’s largest auto market with sales having reached 1.45 million units last fiscal year. That’s actually about 30 percent of the automaker’s total output. Not surprisingly, China is the Honda’s second largest production country after the US. A total of 1.64 million vehicles were built there last year as well.
But Honda saw the writing on the wall regarding the trade dispute between Washington, D.C. and Beijing before last July when those retaliatory tariffs began. It rightly figured the two countries would not resolve things in the near future.
Despite the switch to local Chinese production, however, some parts will still have to be imported from the US and, guess what, they too will be subject to that 40 percent tariff. But at the same time, Honda says the new Acura SUV will be about 20 percent cheaper than the current one. That’s all fine and good for China, Chinese workers and consumers, but what about the employees in Ohio? Will the elimination of RDXs built for China hurt overall factory production and potentially lead to a loss of jobs? It’s a worthwhile question and, hopefully, US demand for the new Acura RDX remains strong enough to withstand the hit.