Several Chinese automakers, including SAIC Motor Corp and Chery Automobile, will suffer if Republican candidate Donald Trump wins the presidential election in November and goes through with a threat to impose a 100% tariff on Chinese cars that are made in Mexico.
Trump vowed on Saturday, while delivering a campaign speech in Dayton, Ohio, to discourage the import of Chinese autos from Mexico.
“Those big monster car manufacturing plants you are building in Mexico right now and you think you are going to get that — not hire Americans and you’re going to sell the car to us, no,” Trump said. “We are going to put a 100% tariff on every car that comes across the lot.”
In early March, Trump said he would impose a 50% tariff on Chinese autos if he wins the presidential election. He also proposed tariffs of as much as 60% on all Chinese goods and 10% on goods made in the rest of the world.
The Trump administration in May 2019 had imposed an extra 25% tariff on Chinese goods on top of the usual 2.5% tariff. US President Joe Biden maintained the policy after he took office in January 2021.
When giving a speech in South Carolina on February 23, Trump mentioned his plan of starting a new trade war against China.
“If China or any other country makes us pay a tariff of, let’s say 100, 200 or even 300%, and they do that, we will make them pay a reciprocal identical tariff of 100, 200 or 300% right back,” he said. “It’s called you screw us and we screw you. Very simple.”
On March 12 during a regular Chinese Foreign Ministry briefing spokesperson Wang Wenbin was asked by a foreign journalist about Beijing’s view on Trump’s proposal of raising tariffs on Chinese goods to 60%.
“The economic and trade relations between China and the US are mutually beneficial and win-win in nature,” Wang said. “Waging wars of tariffs and trade does not serve the interests of China, the US and the world at large.”
According to Chinese media, the number of cars sold by China’s auto companies in Mexico increased to 134,000 units in 2023 from 30,000 units in 2021. Total market share of Chinese autos in the country grew to 10% from 3% for the period.
Major Chinese automakers in Mexico include SAIC Motor group’s MG Motor, Chery Automobile, JAC Motors, Changan Automobile and Geely Auto. SAIC’s MG5 and Chery’s Omoda and Tiggo 4 Pro are among the most popular car models in the country.
New legislation
On February 28, Republican Senator Josh Hawley introduced the Protecting American Autoworkers from China Act, which aims to “counter the threat posed to the US auto industry by raising tariffs on autos imported from China and closing the back door Chinese automakers use to evade US trade laws.”
The Act would increase the base tariff rate of auto imports from China to 100%, for a total tariff of 125% on all imported autos from China.
Hawley said the higher tariffs should be applied to all imported autos manufactured by Chinese automakers, irrespective of where the car is manufactured. He said it will prevent Chinese manufacturers from using other nations, such as Mexico, as a backdoor to avoid these new tariffs.
His call came after the China Association of Automobile Manufacturers said in early February that China exported 4.91 million vehicles in 2023 and surpassed Japan to become the world’s largest automobile exporter. Last year, Japan exported 4.42 million units of cars, buses and trucks.
A Hunan-based columnist named “Da Zhou” writes in an article published on February 29 that the new legislation proposed by Hawley, if passed, will make it very difficult for Chinese automakers to develop their US markets.
The writer says that the US does not want its auto markets to be hit by the import of a large number of Chinese automobiles. He says the suggestion of imposing a 100% tariff on Chinese autos shows that the US lost in its competition with China in the auto sector.
He adds that the potential launch of new tariffs will hurt American consumers who want to buy Chinese automobiles at affordable prices.
Last December, the Financial Times reported that the three largest Chinese electric vehicle firms, including MG, BYD and Chery, have talked to officials in Mexico about their plans to build factories south of the US border.
The report said US officials have raised concerns about Chinese investment in Mexico while Mexican officials said they would remain cautious and avoid upsetting the US in this matter.
Read: US wants allies to boost chip ban against China
Follow Jeff Pao on Twitter at @jeffpao3