The trade dispute between China and the U.S. has caused a range of headaches, not least for global manufacturers. 

CNH Industrial produces agricultural and construction equipment as well as commercial vehicles and has some 66 plants around the world. Their plant in the U.S. state of Wisconsin, produces CASE IH tractors with many of the component parts produced there, sent to other factories and assembly plants. 

But for the last two years, the company, along with many other global manufacturers, have been focusing on how best to negotiate the trade dispute between China and the U.S.

Hubertus Mühlhäuser is the CEO of the company.

“A trade war creates uncertainty. The short term input of the trade war was that some of the raw material prices went up because of the tariffs and we had to price for that because you can’t move your supply chains so fast," he said. "But the most severe impact for us was really that the US farmers have been hurt as their export volume to China has significantly declined.”

That decline left many U.S. farmers struggling to make ends meet, impacting sales of agricultural equipment.

Mühlhäuser says the ‘phase one’ trade agreement between the U.S. and China, and its promise of agricultural sales, brings much needed stability to the sector.

“I think it’s very positive. The longer a trade war drags on, the more volatility you see in the markets and the more uncertainty you see. It will allow us to make investments into the respective regions now based on a clearer set of rules which is always what you need,” Mühlhäuser said.

The company’s global network includes China, where the engines for the tractors are produced.

Mühlhäuser said the China market remains crucial for the company, and not just in the agricultural and construction sectors, but also for the company’s commercial vehicle line, with many of Iveco’s vehicles running on natural gas.

"We are moving away from diesel propulsion in the world towards electrification. There is some intermediary steps towards natural gas engines and China is at the forefront of that," he said. "And this benefits us because we are the first with natural gas trucks on the market so for us it is a very, very important market from a volume perspective, from a manufacturing footprint perspective but also from an alternative propulsion perspective and innovation technology perspective where China, with Europe, is leading the way for emission reduction.”

Looking further ahead, the company is also developing autonomous vehicles.

But for now, there is relief that a phase one trade deal between China and the U.S. has been reached, and although some doubt and tariffs remain, the company can at least begin planning their next steps with a little more confidence.