China Imposes Additional 10% Tariff on US-Made Vehicles | Carscoops

      Currently, the new levy targets American-made vehicles with engines exceeding 2.5 liters in capacity.

      Around $3.1 billion worth of US vehicles were sent to China last year.

      The new additional 10% tariff will apply to vehicles with engine sizes greater than 2.5 liters.

      Brands such as Ford, GM, Mercedes-Benz, and BMW will be affected by these tariffs.

      Shortly after US President Donald Trump imposed a broad 10% tariff on Chinese goods, China retaliated by placing an additional 10% tariff on imported US vehicles. This new tariff follows the failure of both sides to reach an agreement and signifies a significant escalation that could lead to a full-blown trade war.

      On Monday, China's 10% tax on vehicles with engines larger than 2.5 liters took effect, adding to the existing 15% tariff. Although relatively few US-manufactured vehicles with engines over 2.5 liters enter China, customs data indicates that approximately $3.1 billion worth were exported from the US last year. Several brands, including Ford and General Motors, will experience the impact of these tariffs.

      Since 2022, GM has been exporting models like the GMC Yukon and Chevrolet Tahoe to China through its Durant Guild premium import service. These tariffs come at a particularly challenging time for GM, which expects over $5 billion in charges and writedowns related to its Chinese operations in 2024.

      Mercedes-Benz and BMW will also be affected by the tariffs. Both companies manufacture several SUV models in the US for the Chinese market. Bloomberg Intelligence analyst Michael Dean observes that Mercedes is more vulnerable to the tariff compared to BMW, as the latter has been producing the X5 in China since 2022 via the BMW Brilliance joint venture. Dean anticipates that the tariff could potentially lower Mercedes-Benz’s EBIT by 1.5% this year.

      In the past week, China has announced additional tariffs on US goods, including a 10% charge on US liquefied natural gas and a 15% tariff on US crude oil. Additionally, agricultural machinery has been hit with a 10% tariff, and China has enacted export controls on 25 rare metals, many of which are essential for electrical products and military equipment, including tungsten, which is vital for the aerospace sector.

      President Trump is expected to have a call with Chinese President Xi Jinping soon. This conversation may result in an agreement between the two nations, or it could potentially escalate tensions further.