Trump's Trade War Is Going To Screw Over All Of Our Cars

Good morning! Welcome to The Morning Shift, your roundup of the auto news you crave, all in one place every weekday morning. Here are the important stories you need to know.

1st Gear: Yay?

One of President Trump’s campaign planks, and indeed, a plank of his presidency, has been to “bring manufacturing back” to the United States, especially automotive manufacturing and steel and aluminum manufacturing (both of which are vital to the car industry). Trade wars are “good” and “easy to win,” he proclaimed. 

To help bring that manufacturing back, the Trump administration announced a 25 percent tariff on $50 billion worth of Chinese goods, including cars. That felt good and nice, since the American market is already too flooded with Buick Envisions (4,367 sold last month, or less than 1.5 percent of GM sales according to Automotive News), Cadillac CT6 Plug-In Hybrids (17 sold, yes, seventeen, not 17,000), and Volvo S60 long-wheelbase models (doesn’t even register).

Yesterday, China announced what we’re getting in return for starting a trade war. From the Wall Street Journal:

China has taken aim at America’s rural heartland as the top buyer of U.S. soybeans said it would restrict imports.

China’s Ministry of Commerce on Wednesday said it plans to impose 25 percent duties on the commodity in addition to other U.S. agricultural produce including wheat, corn, cotton, sorghum, tobacco and beef. They’re among 106 products ranging from aircraft to chemicals targeted by Beijing in retaliation for proposed American duties on its high-tech goods.

Oh.

But that’s not so bad, right? I mean, who cares about soybeans? Dumb beans anyway.

Oh.

But c’mon, how many people could that be, it’s not like there’s a lot of...

Oh. Well that’s just one county! Sure, 3,700 jobs sounds like a lot, but it’s not something crazy like 190,000 American jobs

Oh.

But again, who cares? This is a car website! It’s just affecting farmers. American car manufacturing is COMING BACK BABY. Just look at the full list that CNBC has generously compiled of products China is planning on slapping with 25 percent tariffs, NO CARS there, right????

1. SUVs with discharge capacity of 2.5L to 3L
2. Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 2500ml, but not exceeding 3000ml for SUVs (4 wheel drive)
3. Vehicles with discharge capacity of 1.5L to 2L
4. Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 1000ml, but not exceeding 1500ml for SUVs (4 wheel drive)
5. Passenger cars with discharge capacity 1.5L to 2L, 9 seats or less
6. Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 1000ml, but not exceeding 1500ml for 9 passenger cars and below
7. Passenger cars with discharge capacity of 3L to 4L, 9 seats or less
8. Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 3000ml, but not exceeding 4000ml for 9 passenger cars and below
9. Off-road vehicles with discharge capacity of 2L to 2.5L
10. Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 2000ml, but not exceeding 2500ml for off-road vehicles
11. Passenger cars with discharge capacity of 2L to 2.5L, 9 seats or less
12. Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 2000ml, but not exceeding 2500ml for 9 passenger cars and below
13. Off-road vehicles with discharge capacity of 3L to 4L
14. Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 3000ml, but not exceeding 4000ml for off-road vehicles
15. Diesel-powered off-road vehicles with discharge capacity of 2.5L to 3L
16. Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 2500ml, but not exceeding 3000ml for diesel-powered off-road vehicles
17. Passenger cars with discharge capacity of 2.5L to 3L, 9 seats or less
18. Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 2500ml, but not exceeding 3000ml for 9 passenger cars and below
19. Off-road vehicles with discharge capacity of less than 4L
20. Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement not exceeding 4000ml for off-road vehicles
21. Other vehicles which are equipped with an ignited reciprocating piston internal combustion engine and a drive motor and can be charged by plugging in an external power source
22. Other vehicles that are equipped with a compression ignition type internal combustion engine (diesel or semi-diesel) and a drive motor, other than vehicles that can be charged by plugging in an external power source
23. Other vehicles which are equipped with an ignition reciprocating piston internal combustion engine and a drive motor and can be charged by plugging in an external power source
24. Other vehicles that are equipped with a compression-ignition reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source
25. Other vehicles that only drive the motor
26. Other vehicles
27. Other gasoline trucks of less than 5 tons
28. Transmissions and parts for motor vehicles not classified

Ah. And apparently a lot of American-made cars are exported to China. Over 100,000 from Mercedes-Benz and BMW alone, the Wall Street Journal says. BMW is staring down the barrel of a $965 million impact, Reuters reported.

Welp. Supposedly this is just the opening round in the trade negotiations, and I’ve been told that trade wars are good and easy to win.

2nd Gear: Fiat Plans To Spin Off Magneti Marelli

Fiat Chrysler Automobiles is planning to spin off parts manufacturer Magneti Marelli, the company said in a press release:

The Board of Directors of Fiat Chrysler Automobiles N.V. (“FCA”) (NYSE: FCAU / MTA: FCA) announced today that it has authorized FCA management to develop and implement a plan to separate the Magneti Marelli business from FCA and to distribute shares of a new holding company for Magneti Marelli to the shareholders of FCA. The separation is expected to be completed by the end of 2018 or early 2019 and shares of Magneti Marelli are expected to be listed on the Milan stock exchange.

“The separation will deliver value to FCA shareholders, while providing the operational flexibility necessary for Magneti Marelli’s strategic growth in the coming years. The spin-off will also allow FCA to further focus on its core portfolio while at the same time improving its capital position,” FCA CEO Sergio Marchionne said. “A separation of FCA and Magneti Marelli is a key ingredient of the 2018-2022 Business Plan which will be communicated in June,” Marchionne continued, “the FCA Board of Directors are confident that this separation is the proper next step, and will be beneficial for Magneti Marelli, FCA and our shareholders.”

Magneti Marelli has been owned by Fiat since 1967, and it had a turnover of €7.9 billion in 2016, with about 43,000 employees and 86 factories, according to the company website.

3rd Gear: The British Car Market Is Plummeting

While the American car market is humming along, fueled by an insatiable desire for crossovers and subprime auto loans, U.K. car sales are plunging, the Financial Times reports:

Sales of diesel cars in Britain fell by close to 40 per cent in March, dragging UK new vehicle sales down by 16 per cent during the most important month in the automotive calendar. Car sales have now fallen in Britain for 12 straight months, following years of strong growth in the market.

There are a number of factors here, including the already-felt effects of Brexit and new diesel taxes, but it looks like Britain is going to be in rough shape for a while.

4th Gear: Well At Least It’s Not All Gray Skies For Britain

While car sales may be in the tank, Peugeot has expressed a vote of confidence in British auto manufacturing, Reuters says:

PSA, which last year acquired Opel/Vauxhall from General Motors (GM.N), will build Peugeot and Citroen models as well as the next Vauxhall Vivaro van in Luton, north of London. Production will rise to 100,000 vehicles from 60,000 in 2017.

The future of Vauxhall manufacturing was a little up in the air after Peugeot acquired the assets, but we’re glad to see it looks like it’ll still exist in some form.

5th Gear: Goodyear Knew Of Dangerous RV Tire Failures For Over 20 Years: Court Docs

I know it’s a bit gauche to talk about ourselves in the Morning Shift, but this one’s important. Jalopnik’s own Ryan Felton broke a story last night about an ongoing case in the Goodyear G159 RV tire failure case, and, well, just read it:

Goodyear Tire & Rubber Co. received failure claims over a tire that was installed on thousands of RVs and is linked to at least nine deaths, dozens of injuries, and hundreds of crashes as early as 1996, the first year it was manufactured and installed on motorhomes, according to court documents obtained exclusively by Jalopnik. The documents also show that Goodyear appears to have vastly underreported the number of failure claims it had received over the tire to federal regulators during a previous inquiry more than a decade ago, and confirm the tire is almost certainly still on the road today.

Reverse: RIP

On April 5, 2000, Lee Petty, an early star of the National Association for Stock Car Auto Racing (NASCAR) and the patriarch of a racing dynasty that includes his son, NASCAR legend Richard Petty, dies at the age 86 in Greensboro, North Carolina. Lee Petty won more than 50 races during his career, including three NASCAR championships, the first driver to rack up that many championship titles. He also won the first-ever Daytona 500, held in 1959.

Neutral: Do You Work In The Automotive Industry?

If so, what are your thoughts on the looming trade war? Hopes? Fears?