The effects of US-China trade war on Taiwan auto parts exports-2
The effects of US-China trade war on Taiwan auto parts exports-2
The war is not yet over.
The US-China trade war has lasted for 3 years; the 25% tariff on auto parts has been imposed for over 2 years. Even after going through Presidents Trump and Biden, it seems not to be coming to an end. If you haven’t read the previous article, please refer to (https://www.buyntryparts.com/the-effects-of-us-china-trade-war-on-taiwan-auto-parts-exports/)
Besides the trade war, Covid-19 came suddenly. During the last year, we can see clearly on Fig.1: the percentage of auto parts exported to the US (HS CODE: 8708) rose from 46.11% to 51.82% continuously. (The data for 2021 only cover January to June.) In the meantime, Japan and China only have a 5% share each. Besides, the export amount increased from 18.9 billion USD to over 20 billion USD in 2021 (estimated) in Fig. 2. The orders keep transferring to Taiwan. At this time, the pandemic in China improved, but it didn’t have any effect on Taiwan.
Fig.1: the Percentage of top Three Export Countries
Fig.2: the Export Amount to the US(USD)
The currency exchange rate is closely related to export competitiveness. Fig. 3 shows the currency exchange rates (USD/RMB & USD/NTD). The higher the value, the stronger the export competitiveness. It’s clear that after June 2021, the RMB went down. It means China was trying to lower the rate to enhance its competitiveness. In this tough situation, the export amount to the US still rose. It’s an obvious proof that the competitiveness of Taiwan’s auto parts is higher than China’s.
Fig.3: the Currency Rate During 2018-2021
Combining the 3 figures, we are sure that Taiwan auto parts manufacturers benefited from the war even though our rate was higher than China’s.
The Pros of Taiwan Auto Parts Manufacturers
In this article, we are talking about auto parts (HS CODE: 8708). It belongs to the manufacturing industry, which needs lots of workers to assemble. It’s very easy to be challenged by Chinese manufacturers. But in fact, it wasn’t. There are some reasons.
1. Market segmentation; quality is the key point; the cost-performance ratio is high.
2. The supply chains are stronger, whether upstream, midstream, or downstream.
3. Whole parts are supplied; in other words, you can find everything here.
4. Famous brands have been built, attracting customers.
Taiwan auto parts are staying ahead of China.
In such a tough situation (the lower the price, the bigger the order), Taiwan manufacturers strike a balance between price and quality. We have an important place in the market.
What We Need to Be Concerned About
Taiwan takes advantage of China in the US-China trade war, but we still need to consider: the US is our dominant market, the 2nd, 3rd; Japan and China are far behind. We all know “Don’t put all your eggs in one basket.” We still need to open up new markets to spread risk. Infringement disputes over body parts are very common because the vehicle manufacturers apply for the exterior patents to protect OEM parts to raise profits. This will be the biggest challenge for all Taiwan manufacturers.
Reference from: https://portal.sw.nat.gov.tw/APGA/GA30
