As trade tensions escalate between the U.S. and China many companies could be hit with production declines such as luxury SUV makers from Germany that make vehicles in the U.S. and then send them off to China; exports from Tesla the electric vehicle maker; and Ford Motor as well.
If the trade dispute between the two nations erupts into a trade war, auto production in both would be affected. However, factories in the U.S. would be hit the hardest because China imports close to 270,000 vehicles from the U.S, with a value of about $11 billion, and it sends very few back.
The California plant of Tesla, which ships nearly 15,000 vehicles per year to China, along with BMW’s South Carolina plant and the Alabama plant of Daimler AG, could lose hundreds of millions of dollars in production if China moves ahead with its double import tariff threats.
The problem Ford has is two-fold. It involves both the importing of its Lincoln luxury vehicles into China and a plan of exporting low-cost compact model Focus from China back to the U.S.
General Motors’ exposure only involves the importing of approximately 30,000 Buick Envision vehicles each year from China and the sending of only a few vehicles back to China.
Automakers stock ended higher Wednesday as shares on Wall Street changed course during the afternoon when trade fears by investors subsided. Tesla shares were 7.3% higher, Ford shares were up 1.6% and shares of GM were up more than 3%.
An analyst with a bank in Europe said that he predicted Tesla would be hit hard with any auto tariff as China represents more than 17% of the revenue generated by the company.
The U.S. has a comment period of 60 days on its plans, and China will wait for action by the U.S. prior to implementing any of its own tariffs.
A source in Washington close to one automaker said the moves by the U.S. and China were a posturing exercise by both countries and part of the process that would play out during the upcoming two months.
China threatened to double the tariffs to 50% on U.S. imported automobiles as well as other goods made in the U.S. to retaliate against the White House administration’s tariffs proposal on a wide range of products from China including autos and automotive parts.