Tariffs on U.S.-made models to force BMW price hikes in China

By Nick Carey

DETROIT (Reuters) - German luxury automaker BMW said on Friday that it will be unable to "completely absorb" a new Chinese 25 percent tariff on imported U.S.-made models and will have to raise prices on the vehicles it makes in Spartanburg, South Carolina.

BMW said in a statement it is "currently calculating related necessary pricing increases" for U.S.-made models imported into China and will announce them "at a later stage."

BMW exports high-margin X4, X5 and X6 SUV and crossover models to China. Last year, the automaker shipped more than 100,000 vehicles from the United States to China.

China, which just days ago cut tariffs on all imported automobiles, slapped an additional 25 percent levy on 545 American products, including U.S.-made cars, beginning on Friday.

The move came in response to the Trump's administration tariffs on $34 billion of Chinese imports.

This poses a tough choice for automakers: absorb the cost of tariffs and take a hit to profit margins, or hike prices and possibly lose sales.

Ford Motor Co said on Thursday that for now it will not hike prices of imported Ford and higher-margin luxury Lincoln models in China, thus absorbing the additional cost of the tariffs.

German automaker Daimler AG said last month that its 2018 pre-tax profits would fall versus last year because new import tariffs on cars exported from the United States to China would hurt sales of high-margin Mercedes-Benz sports utility vehicles.

(Reporting By Nick Carey; Editing by Chizu Nomiyama and Nick Zieminski)