CHINA’S 10 per cent additional tariff on vehicles with larger engines imported from the US took effect on Monday (Feb 10) as the two countries failed to reach a deal over the Trump administration’s blanket levy on Chinese goods.
The extra tariff went into effect on Monday against goods including vehicles with engines larger than 2.5 litres, according to Chinese state broadcaster CCTV, bringing the total impost to 25 per cent.
Exports of such vehicles are tiny relative to the number of cars that companies including General Motors (GM) produce locally with joint venture partners. Manufacturers shipped about US$3.1 billion worth of vehicles with larger engines from the US to China last year, according to customs data.
The additional tariff will apply to automakers including GM and Ford Motor, which are already struggling in China as local drivers switch to electric cars made by domestic manufacturers led by BYD. GM last year flagged more than US$5 billion in charges and writedowns tied to its troubled China operations.
In a bid to appeal to wealthy Chinese buyers, GM launched a premium import service called Durant Guild in 2022 offering vehicles such as the GMC Yukon and Chevrolet Tahoe sport utility vehicles. Both are powered by engines that are three litres or more.
However, as with the tariffs Trump threatened to impose on Canada and Mexico before delaying them after talks with the countries’ leaders, the situation could be fluid. Trump has said he will soon hold a call with Chinese President Xi Jinping, and China’s Ministry of Foreign Affairs has also urged dialogue and consultation to ward off a full-scale trade war. BLOOMBERG
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