General Motors has been denied by the US government any tax relief after it had requested that its China-made vehicle model be exempt from the recently imposed 25 percent tariff on Chinese imports. A letter of denial, dated May 29, was published this week on a US government website.
The tariff hike, which affected one of GM's crossover vehicle models, is part of a broader set of tax increases on over $250 billion worth of Chinese imports. The vehicle in question is GM's compact crossover SUV called the Buick Envision.
The compact SUV, which was first released in China in 2014, is produced by SAIC General Motors Corporation Limited. The company is a joint venture between China's SAIC Motor and GM. The vehicle is assembled in the firm's facility in Yantai, Shandong Province in China.
GM had reportedly reasoned to the US government that its Buick model should be exempt from paying the higher tariff as it would not make logical sense for it to manufacture the car in the United States. According to the company, the sales numbers of the particular model in the United States are just too low and that it would never be able to support establishing a manufacturing plant in the country.
Unlike in the United States, GM's Buick Envision is very popular in China. GM reportedly sells up to five times more Envision units in China when compared to the United States.
The Michigan-based automotive manufacturer maintains that it still has to import some of its products to the United States to remain competitive, especially as more foreign players have now entered the market.
In its petition submitted last year, GM argued that imposing tariffs on its Chinese-made vehicles would be detrimental to its Buick brand and to its consumers in the United States. US Trade Representative countered GM's arguments in its letter of denial stating that the particular product was part of China's "Made in China 2025" initiative.
The US is particularly wary of the initiative, which could give China an edge over the United States in terms of technology and domestic industries.
The Trump administration is currently using the tariff hikes to put more pressure on China to agree to a deal under its own terms. Trump event threatened to impose additional tariff hikes on another batch of Chinese imports estimated to be worth over $300 billion. China has stood their ground, with officials mentioning that they would not be strong-armed into a trade deal.
