GM May Increase China Manufacturing (GM, F)

Shares of US automakers General Motors Co. (NYSE: GM) and Ford Motor Co. (NYSE: F) were hit yesterday on the threat of a tariff on cars imported for sale into China. The government’s threat follows a World Trade Organization ruling that went against China on auto tire exports to the US and a recent case filed with the US International Trade Commission charging China with dumping solar panels.

Ford and GM both have manufacturing operations in China, and build virtually all of the cars they sell in China at those factories. GM sold about 2.43 million vehicles in China last year, according to a report at Bloomberg, and just 1.3% were imported from the US. Ford exports no cars from the US to China, but does sell a Canadian-made model in the country.

The threatened tariff would add nearly 13% to the price of car in a Chinese auto market that is already getting somewhat softer due to slowing economic growth in China. However the market is growing at its slowest pace in more than a dozen years, putting pressure on domestic car makers even as non-Chinese car makers thrive.