During the latest round of tariffs on U.S. imports, China’s took effect on Monday, imposing an additional 10% duty on vehicles with engines larger than 2.5 liters. This brings the total tariff on these vehicles to 25% as trade negotiations between the two nations stall over the Trump administration’s broader tariffs on Chinese goods.
While exports of these large-engine vehicles from the U.S. to China remain relatively small compared to local production, they accounted for approximately $3.1 billion in trade last year, according to customs data. The new tariff affects major American automakers, including General Motors and Ford, both of which are already struggling in the Chinese market as local consumers increasingly turn to domestic electric vehicle brands like BYD.
GM previously reported more than $5 billion in charges and writedowns tied to its challenges to China.
However, the impact extends beyond U.S. brands. For instance, German automakers like Mercedes-Benz and BMW, which have relied heavily on U.S. production hubs for SUVs, also face exposure. Mercedes, in particular, could see its earnings before interest and taxes (EBIT) decline by an estimated 1.5% in 2025 due to the tariff, according to Bloomberg Intelligence.
To maintain its presence among affluent Chinese buyers, GM launched the Durant Guild premium import service in 2022. This service offers models like the GMC Yukon and Chevrolet Tahoe, both of which have engines exceeding three liters. However, the additional tariffs may pose new challenges for this initiative.
Nevertheless, despite the latest escalation, the situation remains fluid. President Trump has indicated plans to speak with Chinese President Xi Jinping, and China’s Ministry of Foreign Affairs has called for continued dialogue to prevent a full-scale trade war.
