Sports & Business

Arnon Dror | Mercedes Benz SUVs Held in Shanghai

Earlier this month, customs agents in Shanghai refused to release a shipment of American-made Mercedes Benz sport utility vehicles manufactured in Tuscaloosa, Alabama according to a report by Reuters. Although customs described them as a constituting a “Safety Risk,” Arnon Dror suspects a deeper explanation may be at play.

On the surface, the shipment of Mercedes GLE and GLS SUVs that were manufactured between May and June of this year are reported to have a problem with their rear brakes, where they were found to be “insufficient” according to a Chinese customs document circulating on social media. The document in question has yet to be verified or authenticated by the Chinese government.

A spokeswoman from the German auto manufacturer, Daimler AG, which owns the Mercedes Benz brand among several others, said that the company had been made aware of the situation, and they are working with authorities to resolve the issue. The spokeswoman could not immediately comment on the number of vehicles affected, but the company is seeking to resolve what it described as an “entirely technical issue.” Image Source: mercedesblog

Arnon Dror notes that Daimler’s stock price dipped significantly earlier this year from a high of 76.48 Euros to a low of 54.78 Euros in June, on a separate occasion, following an announcement that cut its 2018 forecast, despite an increase in production for 2017, due to trade concerns between the United States and China.

Because Daimler is one of the largest car manufacturers in the world, and the largest truck manufacturer in the world, not to mention that the company provides financial services through its Daimler Financial Services Arm, this announcement shook the industry, sparking waves of earnings downgrades amongst the company’s peers.

According to Arnon Dror, the original report came out days after Chinese authorities announced that they would impose additional tariffs of 25 percent on $16 billion worth of U.S. imports from steel products to autos, in what Reuters refers to as “an escalation of the trade dispute between China and the United States.”China’s 25 percent tariff, of course, is a response to the U.S. 25 percent tariff imposed on $34 billion worth of Chinese goods, and subsequent proposals for similar taxation on hundreds of billions worth of other goods.

The Trump administration says that the tariffs imposed by the U.S. are necessary to protect the intellectual property of American companies and its allies. An investigation concluded in August estimates that attacks on the intellectual property of America have been costing us anywhere from $255 to $600 billion a year.

Arnon Dror recalls that President Trump is indeed fulfilling a campaign promise of his to cancel international trade deals that are unfavorable to U.S. companies. According to the president, the U.S. has a trade deficit of $500 billion a year with intellectual property theft of another $300 billion.

To date, the U.S. has imposed additional tariffs on several allies including Canada, Mexico, and different members of the European Union, while members of the G7 have condemned these actions and have retaliated.