Tariff tussles may threaten GAC's U.S. launch

CHONGQING, China — GAC Motor, angling to become the first homegrown Chinese automaker to export light vehicles to the U.S., says it may have to ice those plans after President Donald Trump's threat to level tariffs on imported vehicles.

Li Shao, deputy general manager of parent company Guangzhou Automobile Group Co., said the decision hinges on whether tariffs make its vehicles too expensive to be competitive stateside.

Li noted that while the threatened tariffs are under study, "We believe the U.S. and Chinese leaders have the wisdom to deal with these conflicts."

But he acknowledged that enacting duties could derail GAC's plan to start selling its seven-passenger GS8 crossover in the U.S. in late 2019. GAC has begun recruiting American dealers.

"If they did increase the tariffs, it will have some effect on our plans," Li said through an interpreter last week on the sidelines of the Global Automotive Forum here in western China.

"It's still under discussion, so we will have to wait and see," Li said. "We have to investigate whether we would be competitive enough in the American market. If our price competitiveness were not enough after a tariff increase, maybe we would delay our plans."

GAC plans to sell the seven-seat GS8 crossover in the U.S. in 2019 and is even recruiting dealers. But tariffs could delay the launch.

The U.S. has launched a national security investigation into car and truck imports that could lead to new tariffs.

Publicly, the duties target automakers already importing. But the idea was floated as Washington and Beijing spar over a range of trade disputes. Imposing tariffs on vehicles may be one way the U.S. could stop a wave of Chinese imports before they begin.

GAC has been one of the most eager Chinese players to target the U.S. The company has opened a research center in Silicon Valley and announced plans to open offices in Detroit and Los Angeles this year.

The GS8 also appeared in January at the Detroit auto show.

Li said GAC has wanted to be a global player since the company's inception.

"Chinese enterprises going global will be a common trend in the future," Li said. "Chinese carmakers will switch from the receivers of product technology and brands to the exporters of product technology and brands.

"We are prepared to enter the North American market."