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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  • 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.

  • Nrd515 I bought an '88 S10 Blazer with the 4.3. We had it 4 years and put just about 48K on it with a bunch of trips to Nebraska and S. Dakota to see relatives. It had a couple of minor issues when new, a piece of trim fell off the first day, and it had a seriously big oil leak soon after we got it. The amazinly tiny starter failed at about 40K, it was fixed under some sort of secret warranty and we got a new Silverado as a loaner. Other than that, and a couple of tires that blew when I ran over some junk on the road, it was a rock. I hated the dash instrumentation, and being built like a gorilla, it was about an inch and a half too narrow for my giant shoulders, but it drove fine, and was my second most trouble free vehicle ever, only beaten by my '82 K5 Blazer, which had zero issues for nearly 50K miles. We sold the S10 to a friend, who had it over 20 years and over 400,000 miles on the original short block! It had a couple of transmissions, a couple of valve jobs, a rear end rebuild at 300K, was stolen and vandalized twice, cut open like a tin can when a diabetic truck driver passed out(We were all impressed at the lack of rust inside the rear quarters at almost 10 years old, and it just went on and on. Ziebart did a good job on that Blazer. All three of his sons learned to drive in it, and it was only sent to the boneyard when the area above the windshield had rusted to the point it was like taking a shower when it rained. He now has a Jeep that he's put a ton of money into. He says he misses the S10's reliablity a lot these days, the Jeep is in the shop a lot.
  • Jeff S Most densely populated areas have emission testing and removing catalytic converters and altering pollution devices will cause your vehicle to fail emission testing which could effect renewing license plates. In less populated areas where emission testing is not done there would probably not be any legal consequences and the converter could either be removed or gutted both without having to buy specific parts for bypassing emissions. Tampering with emission systems would make it harder to resell a vehicle but if you plan on keeping the vehicle and literally running it till the wheels fall off there is not much that can be done if there is no emission testing. I did have a cat removed on a car long before mandatory emission testing and it did get better mpgs and it ran better. Also had a cat gutted on my S-10 which was close to 20 years old which increased performance and efficiency but that was in a state that did not require emission testing just that reformulated gas be sold during the Summer months. I would probably not do it again because after market converters are not that expensive on older S-10s compared to many of the newer vehicles. On newer vehicles it can effect other systems that are related to the operating and the running of the vehicle. A little harder to defeat pollution devices on newer vehicles with all the systems run by microprocessors but if someone wants to do it they can. This law could be addressing the modified diesels that are made into coal rollers just as much as the gasoline powered vehicles with cats. You probably will still be able to buy equipment that would modify the performance of a vehicles as long as the emission equipment is not altered.
  • ToolGuy I wonder if Vin Diesel requires DEF.(Does he have issues with Sulfur in concentrations above 15ppm?)
  • ToolGuy Presented for discussion: https://xroads.virginia.edu/~Hyper2/thoreau/civil.html
  • Kevin Ford can do what it's always done. Offer buyouts to retirement age employees, and transfers to operating facilities to those who aren't retirement age. Plus, the transition to electric isn't going to be a finger snap one time event. It's going to occur over a few model years. What's a more interesting question is: Where will today's youth find jobs in the auto industry given the lower employment levels?
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