United States's Car companies Weigh Response to Chinese New Tariffs

China's new two-year anti-dumping and anti-subsidy tariffs on cars imported from the United States are not expected to have a great impact on the automobile industry, analysts said.

The automakers affected by the policy change meanwhile said they are considering whether the new duties will lead them to increase the prices of their vehicles.

The Ministry of Commerce said the new tariff rates will range from 2 percent to 21.5 percent and the tariffs would be imposed starting the following day on cars and SUVs that were built in the US and have engines of 2.5 liters or larger.

The decision was the latest retribution inflicted in a series of trade disputes that has recently arisen between China and the US.

Chinese authorities, saying US imports were "damaging the local car industry", imposed the new tariffs on these companies or operations: General Motors Co (GM); Chrysler Group LLC; Mercedes-Benz US International Inc; BMW AG's factory in Spartanburg, South Carolina; and Honda of America Manufacturing Co.

Many analysts said the duties appear to be a "retaliatory measure" taken by China in response to the US's refusal this year to reduce the tariffs it charges on Chinese-built tires.

On the other hand, the action, which "reflects the rising tensions between China and the US on trade matters", will have only a small effect on the industry, said Bill Russo, founder and president of Synergistics Ltd, an international advisory firm.

Namrita Chow, senior analyst with the information company IHS Automotive, said China is expected to import less than 1 percent of the light vehicles it needs from the US in 2012, a year in which more than 19 million of vehicles are expected to be sold in its borders.

In 2010, the US exported about $3.5 billion worth of vehicles to China, an amount that is projected to increase to almost $4.5 billion this year.

Zhu Bin, a light-vehicle sales analyst for IHS Automotive in Shanghai, said the automobile models most likely to be affected by the tariffs are the Buick Enclave, the Cadillac CTS and the Jeep Cherokee.

Various other models now imported from the US to China are either sold in very small numbers or are subject to such small duties that their prices will scarcely increase, Zhu said.

"Despite the frenzy surrounding the tariffs being imposed on US-built models in China, the data shows that the actual impact of the move will not be dramatic," Chow said. "The new tariffs will raise prices for buyers in China, but buyers of these models already pay a hefty 25 percent import duty."

"The impact on GM is very limited. GM imports less than one-half of 1 percent of its Chinese volume, and the involved Cadillac vehicles are sold to customers who are less sensitive to price," Russo said.