- Approximately $3.1 billion worth of US vehicles were exported to China last year.
- The new additional 10% tariff will hit vehicles with engines larger than 2.5 liters.
- Brands including Ford, GM, Mercedes-Benz, and BMW will be impacted by the tariffs.
Soon after US President Donald Trump implemented a sweeping 10% levy against Chinese goods, China hit imported vehicles from the US with an additional 10% tariff. The new tariff comes as the two sides failed to reach terms and marks an important escalation in what could quickly become a full-blown trade war.
On Monday, China’s new 10% levy on vehicles with engines larger than 2.5 liters came into effect, on top of the existing 15% tariff. While relatively few US-made vehicles with engines exceeding 2.5 liters find their way onto Chinese shores, customs data reveals approximately $3.1 billion worth of these vehicles were exported from the US last year. Several brands will feel the pinch, including Ford and General Motors.
Read: Ford And GM To Feel The Brunt Of Trump’s China Tariffs, But They’re Not Alone
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 bad time for GM as in 2024, as it had more than $5 billion in charges and writedowns related to its Chinese business.
Mercedes-Benz and BMW will also be hit by the tariffs. Both brands produce several SUV models in the United States and sell them in China. Bloomberg Intelligence analyst Michael Dean notes that Mercedes is more exposed to the levy than BMW, as the Bavarian carmaker has been building the X5 in China since 2022 through the BMW Brilliance joint venture. Dean expects the tariff to potentially reduce Mercedes-Benz’s EBIT by 1.5% this year.
China has announced more tariffs against the US over the past week, including an extra 10% on US liquefied natural gas and a 15% charge on US crude oil. China has also hit agricultural machinery with a 10% tariff and imposed export controls on 25 rare metals. Many of these metals play a crucial role in electrical products and military equipment, including tungsten, which is used in the aerospace industry.
President Trump plans to have a call with Chinese President Xi Jinping soon. This could lead to an agreement between the countries, or it may exacerbate things even further.
