The GAC Effect: Imported Chinese Automobiles Face Fierce Criticism From U.S. Politicians

Matt Posky
by Matt Posky
the gac effect imported chinese automobiles face fierce criticism from u s

At this very moment, Chinese-based automaker GAC has a massive booth in the very center of the North American International Auto Show in Detroit. The company has expressed its intent to start importing its vehicles into the United States in 2019. However, 536 miles away (by car), Washington is bemoaning Chinese trade practices — a topic which might be extremely relevant for Guangzhou Automobile Group in the coming years.

On Wednesday, Democratic U.S. Senator Chuck Schumer and President Donald Trump separately criticized China’s trade policy. For automobiles, this translates into Chinese-built cars incurring a maximum 2.5 percent import tariff upon entering the United States, while U.S.-built cars sent East are hit with an average 25 percent tax.

One way around this is for American manufacturers to partner with a Chinese automaker and assemble vehicles in-country. Of course, this doesn’t bolster U.S. jobs, and it gives the locals a front-row seat on exactly how to build an American car. Unfortunately, there really is no other alternative. Chinese law stipulates that foreign subsidiaries must operate as a 50-50 joint venture with an established Chinese firm.

Trump told Reuters in a Wednesday interview that “we have helped to build China because they have taken out so much money in terms of trade deficits with this country.” He continued by saying “when China or another country charges us 50 percent tariffs — more than that in some cases — and we charge them nothing, that’s not fair. That’s not fair.”

Schumer was in agreement. While he and the president have very little in common politically, they seemingly reached the same conclusion in regard to China’s trade policies. Specifically referencing to GAC’s plants coming to America, Schumer took to the Senate floor on Wednesday to condemn Chinese automotive trade rules as “manifestly unfair, and a typically unfortunate example of China’s rapacious trading policies.”

This could spell fierce opposition for Chinese-based manufacturers hoping to sell in the West. But how critical of an issue it will be in the near future is debatable. While GAC appears more ready than ever to make a move to North America, the company previously stated it wanted to begin selling vehicles in the United States in 2017. Obviously, that earlier goal went unmet.

However, it’s showing at the Detroit Auto Show for this year was a no-nonsense affair — rivaling the likes of Hyundai and Subaru in scale. In 2017, GAC Motor established its North American R&D center in California and hosted job fairs in Silicon Valley, Detroit, and Boston. This year, it announced it will commence another round of recruitment programs in America to attract talent, with a plan in place to attend the annual convention of the National Automobile Dealers Association for the first time in its history.

The automaker has even announced plans to change the name of its flagship Trumpchi brand i n the Western market to avoid confusion with the president. While we felt the move was overkill, the company is very serious about it. In Detroit, we referenced the Trumpchi name aloud and a GAC PR representative came over, hands waving, to politely inform us that the name will be altered.

“We look forward to the increasing attention and support worldwide,” said GAC President Yu Jun in a recent announcement. “In our pursuit of the North American market, GAC Motor stands ready to share our high-quality products and work with all of you to create a better life of mobility.”

Are China’s trade-practices unfair to the United States? Yeah, probably. However American-based manufacturers are unlikely to gripe too much, as they don’t want to be shunned from the global car market. That leaves politicians to do the dirty work, and it looks as if they’ve already begun.

[Images: GAC Group]

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6 of 40 comments
  • Hpycamper Hpycamper on Jan 18, 2018

    Trumpchi? We need the Hongqi!

  • Trend-Shifter Trend-Shifter on Jan 18, 2018

    The problem is that China may reduce their tariffs today after their previous tariffs have already accomplished their goals. Too late, damage done! The US should have a policy that states “free trade” with a mirror policy. This means we should adopt free trade however implement our trading partners policies if they do not practice free trade. That mirror trade policy should go back to the tariffs and restrictions that were implemented 8 years ago. Using that policy, China would be charged a 25% tariff on vehicles today. If China lowered that tariff to zero, it would take 8 years before they would get a zero tariff here.

    • See 3 previous
    • Big Al from Oz Big Al from Oz on Jan 19, 2018

      @Jeremiah Mckenna Jezza, The US will not stop exporting, but it will export less earning less. The purchase of more Made in America will reduce living standards. Why does America want to compete with China or Mexican made, especially in the Auto industry, become effective EU competitors first. Sort of like a restaurant for the wealthy whining about a McDonalds menu. As you stated others are doing what the US is doing, many cheaper. That really is the discussion here. The US doesn't have a competitive advantage. Many in the US feel insecure without total dominance in trade. Welcome to what the rest of the world has been experiencing. So rather than blaming China and Mexico get off your ass and figure ways to do better.

  • Bullnuke Well, production cuts may be due to transport-to-market issues. The MV Fremantle Highway is in a Rotterdam shipyard undergoing repairs from the last shipment of VW products (along with BMW and others) and to adequately fireproof it. The word in the shipping community is that insurance necessary for ships moving EVs is under serious review.
  • Frank Wait until the gov't subsidies end, you aint seen nothing yet. Ive been "on the floor" when they pulled them for fuel efficient vehicles back during/after the recession and the sales of those cars stopped dead in their tracks
  • Vulpine The issue is really stupidly simple; both names can be taken the wrong way by those who enjoy abusing language. Implying a certain piece of anatomy is a sign of juvenile idiocy which is what triggered the original name-change. The problem was not caused by the company but rather by those who continuously ridiculed the original name for the purpose of VERY low-brow humor.
  • Sgeffe There's someone around where I live who has a recent WRX-STi, but the few times I've been behind this guy, he's always driving right at the underposted arbitrary numbers that some politician pulled out of their backside and slapped on a sign! With no gendarmes or schoolkids present! Haven't been behind this driver on the freeway, but my guess is that he does the left lane police thing with the best of 'em!What's the point of buying such a vehicle if you're never going to exceed a speed limit? (And I've pondered that whilst in line in the left lane at 63mph behind a couple of Accord V6s, as well as an AMG E-Klasse!)
  • Mebgardner I'm not the market for a malleable Tuner / Track model, so I dont know: If you are considering a purchase of one of these, do you consider the Insurance Cost Of Ownership aspect? Or just screw it, I'm gonna buy it no matter.The WRX is at the top of the Insurance Cost pole for tuner models, is why I ask.