Chinese automaker's U.S. market drive runs into Washington opposition

By David Shepardson

WASHINGTON (Reuters) - Chinese automaker GAC Automobiles' plan to sell vehicles in the United States ran afoul of Washington trade politics on Wednesday, as the top U.S. Senate Democrat and U.S. President Donald Trump separately criticized Chinese trade practices.

GAC Automobiles, formally known as Guangzhou Automobile Group Co Ltd <601238.SS>, said Monday it plans to start selling vehicles in the United States in late 2019, potentially through a partnership with Fiat Chrysler Automobiles NV . The southern Chinese automaker initially said it had hoped to start selling vehicles in the United States in 2017.

On Wednesday, U.S. Senator Chuck Schumer, a New York Democrat, cited GAC's plans announced in Detroit on the Senate floor Wednesday and argued that Chinese automotive trade rules are "manifestly unfair, and a typically unfortunate example of China's rapacious trading policies."

 

Chinese-built cars shipped to the United States face just a 2.5 percent tariff, while U.S.-built cars sent to China are hit with a 25 percent tariff.

Trump told Reuters in an interview Wednesday that "we have helped to build China because they have taken out so much money in terms of trade deficits with this country."

He said that "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."

While Schumer and Trump have clashed on many issues, the interests of Democrats and the Republican president are more aligned on automotive trade. Both want to win votes from auto workers in industrial states such as Michigan or Ohio whose jobs could be threatened should Chinese vehicles come to the United States in high volume. Leaders of the United Auto Workers union regularly raise concerns about U.S.-China automotive trade.

In 2016, General Motors Co became the first major automaker to sell a Chinese-made vehicle in the United States, importing its Buick Envision. GM sold 41,000 of the small SUVs in 2017.

Volvo Cars, a unit of Chinese automaker Geely Automobile Holdings Ltd <0175.HK>, has also been exporting vehicles from China to the United States since 2016. In June, Ford Motor Co said it would move some production of its Focus small car to China from Mexico and import the vehicles to the United States by 2019.

GAC could not immediately be reached for comment Wednesday but confirmed this week it planned to change the name of vehicles sold in the United States from its flagship brand, Trumpchi to avoid confusion with Trump. It also plans to eventually sell vehicles in Europe.

(Reporting by David Shepardson; Editing by Joseph White and Lisa Shumaker)