Why Trump's trade threats won't boost foreign automakers in China

U.S. President Donald Trump is girding for a trade war with China. After slapping tariffs on steel and aluminum imports this month, he announced plans last week to levy tariffs on up to $60 billion (374 billion yuan) of Chinese goods. 

In retaliation, Beijing said it will impose tariffs on $3 billion of American goods, most of which are fruits. Both sides hope to settle the disputes through negotiation.

It remains unknown where the talks will lead. Yet regardless of the outcome, the impact on foreign automakers operating in China will be limited.

But the majority of the imports are large vehicles, especially SUVs. As a result, a global brand faces the risk of running a deficit in carbon credits if it significantly increases imports.

If lower tariffs result in a surge of imports, the Chinese government can still find ways to contain the surge. One way to do it is to raise the consumption tax on large vehicles. 

Tesla Inc. will benefit tremendously if Trump can pressure Beijing to relax controls on foreign ownership of local joint ventures or cut tariffs on imported vehicles. 

The U.S. EV maker now sells imported vehicles in China and is seeking to build a wholly owned subsidiary in Shanghai to manufacture and market in China.

But for other foreign automakers, it will largely be business as usual as the battle over trade between the U.S. and China plays out.