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How to solve the current dilemma under Trump's tariff barriers

Motorcycle engines, frames, drive system and other core accessories are listed in the list of 25% tariffs imposed by the US on $300 billion worth of Chinese goods. This trade policy, which began in 2018, continues to this day, creating a sustained impact on China's motorcycle parts industry. Data shows that the total export of motorcycle parts to the US in 2022 dropped 38% from the pre-tariff war period, but exports to Southeast Asia grew 217% in the same period. This set of contradictory data reveals the profound changes the industry is experiencing, both the pain of the traditional path break and the new opportunities for transformation and upgrading.

First, the deconstruction and reconstruction of the price advantage 

Chinese motorcycle parts enterprises have long relied on the "cost moat" is melting. After the U.S. tariffs, a gear manufacturer in Zhejiang export quotation shows that the FOB Ningbo price from 85 U.S. dollars per set of 106 U.S. dollars, while similar products in India to maintain the price of 92 U.S. dollars. This price inversion directly led to the three major motorcycle manufacturers in North America will be 30% of the order to Southeast Asian suppliers. The cost conduction mechanism triggered a chain reaction in the industry chain. A crankshaft manufacturer in Chongqing to maintain market share, the gross profit margin from 22% compression to 15%, forcing the upstream forging plant will be 10% down processing fees. This profit squeeze effect along the industrial chain level by level conduction, the Yangtze River Delta region has 17% of small and medium-sized supporting enterprises to exit the market. Supply chain reconstruction has given rise to new comparative advantages. Aluminum alloy wheel enterprises in Zhaoqing, Guangdong Province will move production lines to Vietnam, the integrated cost of 18% lower than the domestic, while using the local zero-tariff advantage of exports to Europe to develop the European market. This strategy of “diversification of origin + market diversification” is being adopted by more enterprises.

Second, the road to technological breakout of the limitations of the traditional technology path in the trade war exposed

A carburetor manufacturer in Shandong lost a $5 million annual order from Harley-Davidson because it was unable to meet EPA Tier4 emission standards. This exposed the industry's widespread technical shortcomings: 90% of enterprises invested less than 3% of revenue in R & D, patent holdings of only 1/5 of the Japanese counterparts. intelligent transformation is reshaping the production system. Zongshen Power invested 230 million yuan to build an intelligent casting workshop, the yield rate from 88% to 99.5%, unit energy consumption fell 27%. This digital upgrade at the manufacturing end has enabled the company to show greater flexibility in dealing with order fragmentation. The new energy track opens up room for growth. Loncin General developed an electric motorcycle reduction gearbox with an energy conversion efficiency of 93%, which successfully penetrated the North American shared mobility market.2023 In the first half of the year, the export of new energy parts increased by 340% year-on-year, which became an important engine to hedge against the decline of traditional business.

Third, the re-anchoring of the global value chain is accelerating the formation of regional industrial chains.

 Guangxi Yulin has built the ASEAN Motorcycle Parts Industrial Park, attracting 32 upstream and downstream enterprises, forming a complete chain from aluminum ingot smelting to vehicle assembly. This “store in front and factory at the back” model reduces the logistics cost of products entering the ASEAN market by 40%. Service trade creates new value dimension. Chunfeng Power has set up a technical service center in Los Angeles to provide 24-hour emergency parts supply and maintenance support, upgrading the pure product export to a “product + service” solution. This model has increased its aftermarket share in North America to 15%. The competition for the right to formulate standards is becoming increasingly fierce. The charging interface standard for electric motorcycles developed by the China Motorcycle Chamber of Commerce has been adopted by eight “Belt and Road” countries. This kind of standard output not only brings technical dividends, but also builds up a new trade discourse system. In the tariff game that lasted five years, China's motorcycle parts industry has experienced a metamorphosis like the phoenix nirvana. From Dongguan workshop to Vietnam industrial park, from traditional fuel parts to intelligent electric drive system, from price competition to standard output, the change is far from over. When the tariff barriers forced out of the innovation potential energy continued to release, China's manufacturing is writing a new globalization script - not passive acceptance of the rules, but the initiative to define the future. In this industrial change, what really determines the winner is not the percentage of tariff rate, but the ability coefficient of enterprises to continue to evolve.