U.S. Tariff on Cars Could Stall Market Entry by China’s GAC

China’s Guangzhou Automobile Group Co. Ltd. says a threatened 25% tax on vehicles imported to the U.S. could delay its plan to enter the American market by the end of 2019.

China lowered its import tax on foreign cars to 15% from 25% this month in an effort to avoid the protective tariff. But even the lower rate in China is six times the 2.5% import tax currently levied by the U.S. on foreign cars.

President Donald Trump has ordered the Dept. of Commerce to assess the merits of higher tariffs. His aim is to pressure China and other large trading partners into lowering what he considered unfair trade barriers to American goods.

But if and until the White House decides to implement protective tariffs, GAC says it will move ahead with preparations to debut its best-selling model, the midsize GS8 crossover vehicle, in the U.S. late next year. The GS8 will be powered by a 2.0-liter 4-cylinder engine and 6-speed automatic transmission.

Last month GAC created new units to manage its overseas business. The company also is ramping up a product development center in Detroit. The facility complements a similar lab established earlier in Silicon Valley. The Detroit center will focus on electrified powertrains.

The Chinese carmaker hasn’t said how it will distribute vehicles in the U.S. But it began recruiting would-be dealers in March at the National Automobile Dealers Assn.’s annual convention in Las Vegas.