Escalating
trade tensions between the United States and China, if the tariffs threatened
by both sides are actually implemented, stand to hurt some automakers more than
others.
If a
tit-for-tat tariff dispute between the two countries erupts into a full-blown
trade war, auto production in both will be affected, but U.S. factories would
feel the strongest effect because China imports nearly 270,000 U.S. vehicles,
worth $11 billion, and sends relatively few back.
The United
States has a 60-day comment period on plans, and China is waiting for U.S.
action before implementing its own. A Washington-based source close to one of
the automakers called the moves "a posturing exercise by both countries
(and) part of a process" that will play out over the next two months.
China has
threatened to double tariffs to 50 percent on imported automobiles and other
U.S.-made goods to retaliate against the Trump administration's proposed
tariffs on a broad range of products, including vehicles and automotive parts.
Here are the
automakers with the most to worry about:
Tesla
The electric
automaker's California plant ships an estimated 15,000 cars a year to China.
And unlike the Detroit automakers, which have facilities within China, 100
percent of Tesla's sales there would be subject to the tariffs.
Barclays
auto analyst Brian Johnson, in an investor note on Wednesday, predicted that
Tesla "would bear the brunt of any increased auto tariff on a relative
basis," with China accounting for 17 percent of the company's revenue.
BMW and
Mercedes
The Germans
make luxury SUVs such as the Mercedes GLE and BMW X5 in the U.S. South that are
exported to China — BMW in South Carolina and Daimler AG in Alabama.
Chinese
vehicle imports from all markets last year climbed to 1.2 million, according to
the China Automobile Dealers Association. Less than a quarter of those —
267,473, according to Statista — came from U.S. auto plants, including 100,000
from BMW's South Carolina factory.
A
Mercedes-Benz spokesman said the company does not speculate on ongoing
negotiation between China and the U.S., adding that it is "monitoring the
situation closely."
BMW said in
a statement: "A further escalation of the trade conflict between the U.S.
and China would be harmful for all stakeholders."
Ford
The No. 2
U.S. automaker's problem is twofold, involving both Chinese imports of premium
U.S.-built Lincoln vehicles and its plan to export low-cost Focus compacts from
China to the United States. It would get dinged by both countries' tariffs.
The proposed
U.S. tariffs on Chinese-made vehicles could affect Ford's plans to shift
production of the compact Focus next year from Michigan to China, a move the
company said last year would save it $500 million.
Lincoln,
meanwhile, has been struggling to gain traction in China's crowded luxury car
market. Ford has said it ships about 80,000 vehicles a year to China, including
various Lincoln models.
Ford
declined to comment specifically on plans for the Focus and Lincoln. It said in
a statement on Wednesday: "We encourage both governments to work together
to resolve issues between these two important economies."
General
Motors' exposure is more limited. Though it is the bestselling automaker in
China, most of those cars are built in-country. It sends just a handful of
vehicles over, while importing only 30,000 Buick Envision crossovers a year
from China to the U.S.
GM said on
Wednesday it is "too early" to say how the Trump administration's
proposed tariffs will impact its future production plans for the Envision.
Shares of
automakers ended higher on Wednesday as Wall Street stocks changed course in
the afternoon when investors' trade fears subsided. Tesla shares closed 7.3
percent higher at $286.94, Ford shares gained 1.6 percent to close at $11.33,
and GM shares were up 3 percent at $38.03.
Decisions on
whether and where to shift vehicle production could be complicated by U.S.
President Donald Trump's moves to significantly revamp or withdraw from the
North American Free Trade Agreement that allows tariff-free shipments of
vehicles to the United States from Mexico and Canada.
Reporting by
Paul Lienert in Detroit and Norihiko Shirouzu in Beijing; additional reporting
by David Lawder in Washington, Allison Lampert in Montreal and Alexandria Sage
in San Francisco.
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