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Carmakers alarmed by latest round of Chinese tariffs

Keith Laing
The Detroit News

Washington — Alarm bells are ringing at carmakers after the latest round of retaliatory tariffs that will hit cars exported to China from the United States.

China said Friday it will impose tariffs on $75 billion worth of U.S. goods, including cars, in response to President Donald Trump's plans to levy tariffs on $300 billion worth of Chinese goods before the end of the year. In addition to the new levies that take effect Sept. 1 and Dec. 15, China said it will resume a 25% tariff that was previously put on U.S. cars, and a 5% levy that will again be levied on auto parts and components.

A U.S. flag flies on a American consulate car in China. China on Friday retaliated with tariffs that will hit producers of cars in the U.S.

Taking into account existing tariffs on autos, total duties charged on U.S.-built cars would be as high as 50%.

Ford Motor Co. and Tesla Inc. likely would feel the biggest impact of all the U.S.-based carmakers.

“Ford is the leading exporter of vehicles assembled in the U.S. and we are uniquely a net exporter to China," Ford spokeswoman Rachel McCleery said in a statement. "We encourage the U.S. and China to find a near-term resolution on remaining issues through continued negotiations." 

She said it is essential for the two countries to work together to advance balanced and fair trade, but that became even less likely late Friday afternoon when the president said he would boost existing tariffs on Chinese goods.

General Motors Co. and Fiat Chrysler Automobiles NV declined to comment on the latest duties imposed by China, deferring to a statement by the Alliance for Automobile Manufacturers, which lobbies in Washington for the Detroit Three and other carmakers. 

"This move is unfortunate for consumers and the entire auto sector," the auto alliance said in the statement. "Customers win when trade barriers are lowered, and the auto industry can thrive when there’s a robust and competitive trading environment between two of the world’s largest economies."

U.S. carmakers exported 163,618 vehicles to China in 2018, according to the U.S. Department of Commerce's International Trade Administration.

Ford Motor Co. sold more than 752,000 vehicles in China in 2018; 16,131 were exported there from the U.S., according to Ford.

GM and its partners in China sold 3.64 million vehicles there in 2018, topping the 3.5 million sold by the company in the U.S. Although China is GM's largest market, most of the vehicles GM sells there are built in China. Recent numbers for the total U.S.-to-China exports for GM were not immediately available, but the company exported 6,273 cars to China in 2015, according to the Commerce Department.

Tesla is expected to double its exports from the U.S. to China to nearly 35,000 this year, according to LMC. BMW and Daimler ship large numbers of SUVs from plants in the U.S. to China.

The BMW X5 is the No. 1 vehicle exported there from the U.S., according to LMC. The biggest domestic export to China is the Lincoln MKC/Corsair, which is No. 4. The Tesla Model X is No. 6, the Ford Explorer is No. 7 and the Lincoln Continental is No. 8. 

On a day when the major stock indexes took a hit, stocks of U.S. carmakers fell further: Tesla stock lost 4.8% in trading Friday, GM was off 3.2%, Ford was off 3% and Fiat Chrysler was off 2.7%.

John Bozzella, CEO of the Association of Global Automakers, which lobbies for foreign-owned carmakers, said "the tit-for-tat tariffs, absent any meaningful negotiations, are damaging to the American auto industry. 

"When these tariffs were initially imposed by China in 2017, American exports of finished vehicles dropped by 50%," Bozzella said. "We can’t let that happen to American workers again. If those tariffs go back into effect and remain in effect, American jobs are at risk. There’s no question about that."

Automakers have chafed under tariffs that Trump has imposed on everything from foreign steel and aluminum, to Chinese components and assemblies.

The latest pushback shows the Chinese government is not backing down and automakers are likely to suffer, said Charlie Chesbrough, senior economist and senior director of industry insights for Cox Automotive. "As the industry moves into the next decade of electrification and mobility," he said, "the China-U.S. trade war’s high tariffs could have huge implications on where the next generation of vehicles and parts are made." 

China's retaliation was expected, said Kristin Dziczek, vice president of the Center for Automotive Research, but she said U.S.-based automakers need to sell cars in the Chinese market to maintain their positions in the global industry. 

"Could we make vehicles in the U.S. without Chinese imports? Yes," she said. "Can U.S.-based automakers survive without having access to the largest market in the world? No. We can't wall ourselves off from any interaction with the Chinese auto market." 


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Twitter: @Keith_Laing

Detroit News Staff Writer Kalea Hall contributed.