Business News

CCTV Script 25/06/18


— This is the script of CNBC's news report for China's CCTV on June 25, 2018, Monday.

It is obvious that president Trump threatened a 20% tariffs on cars imported from EU making EU reacts with dismay, and it also brings uncertainty to the trade prospects that worth 1 trillion euros between these two countries. On weekend, Vice Chairman of the European Commission Katynin said in an interview with the French newspaper "Le Monde" that if Trump decides to raise their import tariffs, EU will have no choice, but to react. However, if these 2 parties escalate the trade dispute in the auto industry, then that would be a great blow to market.  Auto exportation is economic arteries to EU; The United States accounted for about 15% of global sales of Mercedes and BMW in 2017, 5% and 12% of Volkswagen and Audi.

Once imposing the tariffs, it would be a great blow to Germany, the industrial power in EU. Germany is the country with the largest EU exports to the United States, and it almost monopolizes 90% of the US market in the luxury model market. For example, the most important German car export types include the Audi A4; BMW's 3 Series, 4 Series and 5 Series; Mercedes-Benz's C-Class, E-Class and CLS-class and so on.

According to data from the German Automobile Industry Federation, last year, German car manufacturers exported 494,000 cars to the United States. According to data from the German Chamber of Commerce and Industry, including autos and parts and components, Germany’s export of automobile-related products to the United States last year was US$28.6 billion, accounting for more than a quarter of Germany’s total exports to the United States.

US can’t stay aloof or immune from imposing tariffs on EU’s auto. First, the U.S. Chamber of Commerce noted U.S. auto production has doubled over the past decade, said tariffs “would deal a staggering blow to the very industry it purports to protect and would threaten to ignite a global trade war.” Second, auto tariffs friction will also bring a potential influence to US local employment. For example, German Volkswagen, Daimler, and BMW all have automakers in the US. Among them, BMW is the largest employer in South Carolina and has more than 9,000 employees in the state. So the dispute between EU and US down weights the stock price of auto business.

First of all, EU automobile index dived following Trump’s statement released on Friday, Daimler declined 0.31%; Volkswagen was off 0.07% and BMW lost 1.12%.

In US stock market, Fort shed 0.47% while GM continued to decline but closed up 0.32%.  

Currently, US imposes 2.5% tariffs on cars imported from EU, while EU imposes 10% on that imported from US, We will keep an eye on this issue.