China targets US snowmobiles in latest trade war tit-for-tat

Chad Bray
China targets US snowmobiles in latest trade war tit-for-tat

The growing popularity of winter sports in China may be headed toward a collision with the country’s trade policies as a trade war escalates between the world’s two largest economies.

Among proposed tariffs on US$60 billion of US-made products, China has targeted snowmobiles and snow groomers that are increasingly important to the domestic ski industry.

Neither type of vehicle accounts for a large amount of imports between the two countries – about US$16 million of snowmobiles were exported to China in the first half of this year, according to the latest US trade data. By comparison, US$12 billion in soybeans were shipped from the US to China last year.

Instead, the proposed tariffs demonstrate how far China is stretching to try to find enough items to target in an ongoing tit-for-tat with the US, with lightly imported items such as condoms and American beer facing Chinese tariffs.

China reaches for American-made condoms as it fumbles to answer US tariffs in trade war

The Trump administration has threatened to put 25 per cent tariffs on half of all products imported from China as it seeks to reduce a US$376 billion trade deficit between the two countries.

Polaris, a maker of snowmobiles, all-terrain vehicles and Indian motorcycles based in Minnesota, has been outspoken about the impact of US tariffs and retaliatory levies by other countries on its bottom line, saying in July that higher duties would add US$40 million in costs this year.

“Our focus on this issue and its intended financial impact has increased dramatically in the last three months. We steadfastly support fair and freer trade, which is the stated emphasis for these tariff actions,” Scott Wine, the chairman and chief executive, said on a conference call with analysts. “But we cannot ignore their very real negative consequences for our employees, suppliers, customers and, potentially, shareholders.”

A major hurdle in trade talks: US and China ‘play by different economic rules’

Polaris did not respond to requests for comment on the proposed China tariffs, but has said that the impact of tariffs on its business could be “much larger” in 2019.

China and the US are set to resume trade discussions this week as a delegation of Chinese trade envoys led by Deputy Commerce Minister Wang Shouwen has journeyed to Washington. In an interview with Reuters on Monday, US President Donald Trump said there was “no time frame” for ending the trade tensions.

The talks are expected to begin on Wednesday, a day before the US is set to impose tariffs on another US$16 billion of Chinese goods. The US has already put tariffs in place on US$34 billion of Chinese-made products and has threatened to place tariffs on many more goods.

Trump seeks ‘results-oriented’ ties with China as resumption of trade talks nears

The tariff showdown comes as the number of visits to China’s ski resorts has more than tripled in the past decade as incomes have risen and the Chinese government has led a push to greatly expand the winter sports industry ahead of Beijing hosting the Winter Olympics in 2022.

Skiing was not a popular choice for many Chinese in the past, with only about 10,000 visits a year to ski resorts in the mid-1990s. But there were 17.5 million visits to Chinese ski resorts last year, according to the “China Ski Industry White Book 2017”, a report prepared by the industry.

Since 2008, the number of ski resorts in China, including indoor facilities, have nearly tripled to 703 last year, according to the report. More than 50 new ski resorts opened in China in 2017, it said.

US-China ‘beer war’ likely to go flat as drinkers’ preference for local brews takes the fizz out of proposed tariffs

The expansion of ski resorts comes as national and regional governments in China have pushed to increase the size of the recreational winter sport industry.

Reuters reported in May that the local government in Hebei province in northern China hoped to create a winter sports industry worth 150 billion yuan (US$21.7 billion) by 2025.

Hebei province surrounds Beijing and is one of the fastest-growing areas in China for new ski facilities, with 12 resorts opening last year, according to the White Book report.

Against this backdrop, exports from the US to China of snowmobiles spiked in 2017 and the first half of this year, according to data from the US International Trade Commission.

The US sent about US$1 million worth of the vehicles to China in 2014. Last year, that number rose to more than US$12 million, and the US exported snowmobiles worth US$16.2 million in the first half of this year.

Shipping container maker says customers watching trade war ‘carefully’

The US had originally sought to target Chinese-made snowmobiles, but dropped that from its proposed tariffs in June. About US$526,000 worth of snowmobiles were exported from China to the US last year, according to US trade data.

Zhe Jiang Taotao Vehicles Co, which operates as Tao Motor, is a Chinese maker of dirt bikes, scooters and go-karts that has begun selling its snowmobiles in the US in recent years.

Snowmobiles and snow groomers – large tracked vehicles that are designed to smooth ski slopes, but can also be outfitted to carry a small number of passengers – are used in China to transport skiers to remote mountaintops where lifts are not available. Some ski resorts in northern China have added snowmobile courses as part of their amenities, but downhill skiing is a more popular winter sport in China.

For example, Badaling Ski Resort, outside Beijing, advertises a 2,300-metre snowmobile course. Snowmobile excursions also are part of the activities at the annual Harbin International Ice and Snow Sculpture Festival in Harbin, Heilongjiang province.

Snowmobile makers with American operations are still trying to assess the potential impact of the Chinese tariffs on their business, given that most of their sales are in the US and Canada.

The Japanese vehicle manufacturer Yamaha Motor Company said that its export business of snowmobiles from the US to China is minimal, with a Yamaha spokesman saying that the proposed China tariffs are not likely to have a “big impact” on its business.

“Obviously, the situation is very fluid and we are still evaluating the potential impacts on our business,” said Brandon Haddock, a spokesman for Textron Inc., the Rhode Island-based aerospace and defence contractor behind the Arctic Cat brand.

New snowmobiles start at about US$3,000, but can exceed US$17,000 each for the latest 2019 performance models.

Even fewer snow groomers, which can start at US$125,000, were shipped from the US to China, but they are targeted for tariffs by Chinese officials.

Nearly three-quarters of the 68 snow groomers exported to China last year came from Italy and Germany, with only two imported from the US, according to the White Book report. Snow groomers are typically included as part a larger export category that includes other tracked vehicles, so US trade data was not available.

American snow groomer manufacturers Tucker Sno-Cat Corporation and PistenBully did not respond to requests for comment.

This article China targets US snowmobiles in latest trade war tit-for-tat first appeared on South China Morning Post

For the latest news from the South China Morning Post download our mobile app. Copyright 2018.

More from South China Morning Post: