Wonkblog Analysis ‘A slap in the face to U.S. taxpayers’: Most vehicles imported from
‘A slap in the face to U.S. taxpayers’: Most vehicles imported from China are made by an American company
By Danielle Paquette March 20 at 6:12 PM
The compact Buick Envision SUV has been a smash hit for GM in China since its introduction in 2015. Its successful run continued to drive sales gains for GM in April. General Motors said on Thursday (5 May 2016) that its sales in China rose 7.5% in April, as GM was able to find solid sales growth with SUVs and premium cars while some rivals struggled.
The Buick Envision comes with a peculiar label for a foreign-made car: Designed in the United States. The midsize luxury SUV, a product of General Motors, is the top-selling vehicle imported from China in the United States. This alarms union leaders, who call for American companies to build cars in America, and could make General Motors a target for President Trump's tirades on trade.
The Envision, which debuted last year, was the first Chinese import from any of the U.S. big three automakers. “The Invasion,” United Auto Workers president Dennis Williams called it.
Now, as President Trump gears up for a fight with China over auto imports, the model could become a symbol of the administration's efforts to discourage American companies from moving more business out there.
The Envision comprised about 44,000 of an estimated 55,000 imports from China this year, according to IHS Automotive, a global analytics firm. That's a fraction of cars imported from Mexico last year, which accounted for 1.8 million vehicles, mostly small cars.
But White House officials have signaled Trump will try to renegotiate how China treats U.S. automakers when he meets next month with Chinese President Xi Jinping, according to an Axios report. They don’t think American companies should pay 25 percent import taxes to reach Chinese consumers, while foreign automakers pay just 2.5 percent to access the U.S. market.
GM sells most of its Envision models in China, but U.S. sales have been steadily climbing — from 89 last May to 3,139 last month.
The automaker says consumer appetite in the U.S. isn't large enough to sustain a local factory for the SUV, which has a suggested retail price of $34,000. “This is a product that is primarily for the Chinese market," said General Motors spokesperson Patrick Morrissey.
The imports were intended to meet an uptick in demand, he said. The Envision, he added, was designed and engineered in Michigan, and that effort created 500 jobs.
Kristen Dziczek, director of labor and economics at the Center for Automotive Research, said the Envision likely ended up in China because the desire for the SUV was greater in Beijing than, say, Detroit.
“As a brand, Buick would not have survived were it not for demand in China,” she said. “If they can make a few more and sell them here and fill out their line-up in Buick dealerships, then that’s all the better.”
But auto imports have become a target for Trump who has warned American companies against outsourcing work — and been especially tough on trade with China.
“Any business that leaves our country for another country, fires its employees, builds a new factory or plant in the other country, and then thinks it will sell its products back into the U.S. without retribution or consequences, is WRONG!" he wrote in a December tweet. "There will be a tax on our soon to be strong border of 35% for these companies wanting to sell their product, cars, A.C. units, etc., back across the border."
The sale of Chinese-made GM models in the U.S. has also angered unions. “There’s another example how employers will go to low-paying nations and manipulate the process and start importing into the greatest market in the world, the United States of America,” Williams said of the Envision at a recent round-table. “That’s unfair to the American taxpayer, and that’s unfair to the American people.”
UAW Vice President Cindy Estrada, director of the union’s General Motor department, compared the imports to “a slap in the face to U.S. Taxpayers."
“General Motors continues to use the slogan, 'build it where you sell it,'" she said after General Motors unveiled the model. “The Company should adhere to their own words and should reconsider this decision and place this product into one of their facilities in the United States.”
China requires foreign entities to partner with a Chinese firm before putting down roots and selling cars in the country. The country’s steep fees have encouraged automakers worldwide to set up shop within its borders — including Ford, Chrysler Fiat and General Motors.
Most of the vehicles produced by multinational firms in China are sold to Chinese consumers, who pay top dollar for foreign name brands. China is General Motors’ largest market. The automaker, which also sells Cadillacs in the country, posted 321,264 vehicle sales there in January. GM’s February number in the U.S. was 237,388 units.
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