Chrysler, Ford and General Motors are meeting with the American Automotive Policy Council this week to discuss China’s trade investigation into US carmaker subsidies which is due to begin today and could result in tariffs being imposed on the companies’ vehicle imports.
Following a petition from automotive companies in China, authorities are assessing whether US government handouts – which gave Chrysler and GM $60 billion – add up to unfair competition, an accusation more usually targeted at China. (Ford, which has announced a return to profitability this week, did not receive any support.)
US government officials are currently in China for trade talks and have been in discussions about the petition. Under World Trade Organisation rules, China has to invite the US for consultation on the petition before initiating the investigation to try and find a resolution.
The move by China is widely considered a retaliation against the US for imposing punitive tariffs on Chinese tyre imports. Car and light truck tyres imported from China are subject to a tariff of 35% for the next year, which will drop to 30% and 25% in the following two years, respectively.
The threat of investigation by China heightens trade tensions between the two countries.
Chrysler, Ford and GM only export between 7,000 and 9,000 of the total US exports to China of around 30,000 vehicles, and have instead established joint venture facilities in the country to benefit from the growth in car sales there. Chinese annual car production topped 10m for the first time last month. But while export figures are not significant the symbolic affect of turning the tables on Washington could have serious repercussions.
A GM spokesperson told Automotive Logistics that it was studying the potential implications of the move while Chrysler deferred comment to the American Automotive Policy Council, the trade body representing the Big Three.
