US-China Trade Tensions Escalate with New Tariffs on SUVs

CNChina|

A new 10% tariff on US-manufactured vehicles with engines larger than 2.5 liters took effect in China on Monday, escalating trade tensions between the two nations. According to Chinese state broadcaster CCTV, this additional tariff is part of an ongoing trade dispute and raises the total tariff on these vehicles to 25%. Last year, about $3.1 billion worth of these large-engine vehicles were exported from the US to China.

Major American automakers like General Motors (GM) and Ford Motor Company are particularly affected, with GM reporting over $5 billion in losses tied to its operations in China. The tariff comes as Chinese consumers increasingly favor electric vehicles from domestic manufacturers such as BYD Co., shrinking the market for US-produced SUVs and pickups.

German companies, including Mercedes-Benz and BMW, are also impacted, though less severely, as they have shifted some production to meet local demands. Bloomberg Intelligence noted that the additional tariffs could affect Mercedes' earnings before interest and taxes by up to 1.5% if prices are not adjusted. Talks between US and Chinese leaders, including President Trump and President Xi Jinping, may still reshape the situation.

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