Trade wars may mean that more BMW SUVs will end up being produced outside the U.S.
BMW announced this week that it would start building more of its SUVs in China due to the recently enacted 40% import tax on cars sent there from the U.S. This massive increase was done in reaction to the Trump administration imposing import tariffs on Chinese products. Currently BMW is the largest exporter of cars in the U.S. and it makes the X3, X4, X5 and X6 SUVs at its Spartanburg plant. Employing 10,000 workers, BMW says that production numbers won’t be affected but with the recent announcement that the upcoming iX3 will also be built in China.
Let’s hope that situation doesn’t change though as a number of the newly released X5 will also be built in China and BMW has signed an agreement with their Chinese partner Brilliance Automotive Group to increase production numbers to 520,000 vehicles by next year. Locally produced SUVs that are sold in China will meanwhile incur a price increase to counteract the Chinese import taxes. The Trump administration is not backing down anytime soon though as they claim that the Chinese requirements that U.S. firms transfer key technology to do business there are unacceptable.
The topic is a complex one, but the short-term results are that trade between the two countries will become costlier than before. Meanwhile, BMW CEO Harald Krueger told Bloomberg that their agreement sets a long-term framework for their future in China — a future involving continued investment, further growth and a clear commitment to the development and production of electric vehicles,” Let’s hope that the long-term impacts of these decisions do not detrimentally impact the U.S. consumer.