China’s move to cut tariffs won’t help U.S. carmakers
China’s move to reduce tariffs on imported cars to 15 percent makes little difference to U.S. automakers.
Traditional Detroit brands like Lincoln and Jeep collectively exported fewer than 100,000 vehicles to China last year. The main reason, said Bloomberg intelligence analyst Kevin Tynan, is that the 25 percent tariff the carmakers faced for years forced them to open plants with partners in the country to avoid import taxes altogether.
“I don’t think it changes much,” Tynan said in a phone interview. “The companies are already established in terms of manufacturing and dealer networks. And 15 percent is still a significant tariff.”
Ford Motor Co. did the most exporting among U.S. automakers by shipping almost 74,000 cars to China last year, mostly for its premium brand Lincoln, according to data compiled by Bloomberg Intelligence. But Toyota Motor Corp. and BMW AG each both almost tripled Ford’s vehicle imports.
Italian-American automaker Fiat Chrysler Automobiles NV will enjoy lower tariffs on Jeep sport utility vehicles, although imports have been falling as the company makes more of its models in China. The 16,601 SUVs that the brand imported last year were less than a quarter of its total in 2015.
General Motors Co. imported fewer than 2,600 vehicles as the company has shifted to building more Cadillacs and Buicks with its domestic joint-venture partners.
Tesla Inc. will benefit because China’s government provides incentives to new-energy vehicle buyers, and the electric-car maker relied entirely on imports for the more than $2 billion in sales it generated in the country last year. The Tesla brand ranks second so far this year among U.S. automakers, trailing only Ford’s Lincoln.
Still, both Lincoln and Tesla have plans in the works to manufacture cars in China soon. Ford will introduce a locally assembled Lincoln SUV next year, while Tesla Chief Executive Officer Elon Musk has said he may announce the location of the company’s first car and battery plant in China by the third quarter.
Tesla’s ability to take advantage of the lower tariff also may be limited by how quickly the company is able to clear manufacturing bottlenecks and boost output from its U.S. car and battery plants.
“Tesla doesn’t have enough production going to meet the demand they have in the U.S. now,” Tynan said.