The Trade War With China Begins As Tesla Forced To Ramp Up Prices

Jul. 11, 2018 9:50 AM ET by Jared Rosenholtz Government / 11 Comments

What does this mean for the US car market?

Last Friday, the trade war between China and the US kicked off, as US President Donald Trump implemented a 25% tariff on $34 billion worth of Chinese goods. China has already retaliated with an increase on electric car tariffs from 15% to 40% according to Bloomberg. Of course, this means that electric cars that are imported into china will now be significantly more expensive. According to The Wall Street Journal, Tesla has had no choice but to raise its prices in China.

The Model X now costs $140,000, which is a significant increase over the old price of $117,100. Likewise, the Model S now costs $128,400, an increase of over $21,000 compared to the old price. Tesla CEO Elon Musk will reportedly meet with Chinese officials in Shanghai and Beijing this week to discuss the issue. It doesn't seem like either government is ready to back down here. President Trump could be looking to impose tariffs on even more goods, and China has publicly accused the US of "bullying" and igniting "the largest trade war in economic history." Musk is a pretty smooth talker, but he has a lot of work to do to smooth over Chinese officials.

This trade war could have a meaningful impact on the automotive industry and the economy as a whole. Many automakers rely on parts from China, which could cause price increases across the board. We also haven't factored in possible price increases for cars built in China. General Motors may be greatly impacted - cars such as the Buick Envision and Cadillac CT6 Plug-In are both built in China.