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China plans to resume 25% tariffs on US car imports

The tariffs will once again take effect starting this December.

The X5 is a best-seller in China.
Andrew Krok/Roadshow

The Trump administration and its Chinese counterparts agreed to a ceasefire in the ongoing trade war previously, but both sides are now ready to ratchet things up again. For automakers, it's concerning news as China announced it will resume 25% tariffs on cars imported from the US.

Bloomberg reported on the announcement that China's Ministry of Finance made on Friday. In addition to the auto tariffs on cars imported from the US, China also plans to impose even greater tariffs on soybeans and crude oil.

Producers of both products face an extra 5% tariff starting in September, while the auto tariffs will resume this December. The timeframe mirrors tariffs the Trump administration's plans to impose on $300 billion worth of Chinese goods.

Some automobiles will be subject to an additional 10% tariff, though specifics weren't included. However, the additional tariffs in combination with existing duties could make US-imported vehicles 50% more expensive starting Dec. 15. Bloomberg highlighted Daimler, BMW and Tesla as most vulnerable.

In fact, BMW and Daimler manufacture six of China's 10 best-selling vehicles here in the US. They include the BMW X5, Mercedes-Benz GLE, GLS and BMW X4. As for American automakers, the Lincoln MKC, Ford Explorer and Jeep Grand Cherokee also rank in the top 10 best-selling models exported to China, per Bloomberg. The Tesla Model X will also be hit hard as the Silicon Valley-based carmaker does not build any vehicles in China yet.

For automakers building vehicles in the US, it may incentivize them to add production to Chinese facilities or move production entirely. China remains the world's largest market for new cars despite a slowdown. The report said a Chinese delegation still plans to visit Washington, D.C. for negotiations this September where we may see these tariffs delayed.

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