Higher tariffs may hurt GAC strategy in US

BEIJING: Guangzhou Automobile Group Co Ltd (GAC) yesterday said a brewing trade tension between China and the United States could hurt the carmaker’s plans to break into the US market if tariff barriers were raised.

Increased US tariffs on imported Chinese vehicles would have a “significant” impact on its plans and strategy to break into the US by next year, said GAC Group president Feng Xingya at the Beijing Auto Show here.

In a standoff over trade, the US government had said it could add a 25 per cent tariff to some 1,300 products from China, including petrol- and electric-powered motor vehicles. China levies a similar tariff currently on imported US cars.

“If the US really levies a 25 per cent tariff, it would have significant impact on us. We are now doing studies on our price competitiveness and profit potential (after any tariff increase),” said Feng.

Chinese carmakers export relatively little overseas to markets such as the US, but manufacturers like GAC and Volvo cars-owner Geely Automobile Holdings Ltd are increasingly looking abroad.

GAC Group and subsidiary GAC Motor presented its Trumpchi brand at the Detroit Auto Show last year, though it subsequently considered changing the name for the American market due to its unintended similarity to the name of US President Donald Trump.

Feng added that the spectre of tariffs made the current climate risky for all Chinese firms seeking to do business in the US.

“Chinese firms should exercise more caution when they enter the US market and make strategies (for any risks),” he said.

There is broad hope that China and the US can reach an agreement on trade to avert the possibility of extra tariffs. Otherwise, China is prepared to retaliate with its own list of tariffs on US goods.

Trump on Tuesday said the US would likely reach a trade agreement with China and that officials from both sides would meet for negotiations in a few days’ time.