The escalating tariff tensions between the US and China may hit production of German SUVs made in the US South and shipped to China with exports by Tesla and Ford also vulnerable, a media report said.
If a tit-for-tat tariff dispute between the two countries erupts into a full-blown trade war, vehicle production in both would be affected but US factories would feel the strongest effect because China imports nearly 270,000 US vehicles, worth US$11bn, and sends relatively few back, Reuters reported.
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Tesla's California plant, which ships an estimated 15,000 cars a year to China, as well as BMW's South Carolina factory and Daimler's Alabama facility, could lose hundreds of millions of dollars' worth of production if China goes ahead with its threat to double import tariffs. All three export high-margin luxury models to China, the news agency said.
Ford exports premium Lincoln vehicles to China and plans to import the low-cost 2019 Focus model from China to the US, starting later this year. Some Chinese made Volvos are also imported into the US.
General Motors' exposure is limited because it imports only 30,000 Buick Envision crossovers a year from China, while sending just a handful of vehicles back, Reuters noted.
Barclays auto analyst Brian Johnson, in an investor note cited by Reuters, predicted Tesla "would bear the brunt of any increased auto tariff on a relative basis" with China accounting for 17% of the company's revenue.
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By GlobalDataThe US has a 60-day comment period on plans, and China is waiting for US action before implementing its own, the report said.
A Washington-based source close to one of the automakers cited by Reuters 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% on imported automobiles and other US-made goods to retaliate against the Trump administration's proposed tariffs on a broad range of products, including vehicles and automotive parts.
Ford had said shifting Focus production from Michigan to China would save it $500m.
Ford declined to comment specifically to Reuters on plans for the Focus and Lincoln. It said in a statement: "We encourage both governments to work together to resolve issues between these two important economies."
A Mercedes-Benz spokesman said the company did not speculate on ongoing negotiations, adding that it was "monitoring the situation closely".
BMW said in a statement: "A further escalation of the trade conflict between the US and China would be harmful for all stakeholders."
Tesla declined to comment.
GM said it was "too early" to say how the Trump administration's proposed tariffs would impact its future production plans for the Envision.
Chinese vehicle imports from all markets last year climbed to 1.2m, Reuters said, citing the China Automobile Dealers Association. Less than a quarter of those – 267,473, according to Statista – came from US auto plants, including 100,000 from BMW's factory.
Reuters also noted decisions on whether and where to shift vehicle production could be complicated by 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 US from Mexico and Canada.
