China's GAC may delay U.S. plans in wake of trade spat

PARIS -- Chinese automaker Guangzhou Automotive Group may delay plans to sell vehicles in the United States because of the escalating trade spat between the world's two biggest automaking nations.

The company in January said it would introduce a seven-seat utility, called the GS8, in the U.S. next year, and it solicited dealers in March at the annual National Automobile Dealers Association convention.

But the new 25 percent tariff imposed on Chinese imports by President Donald Trump has forced GAC to change its outlook.

"There may be a delay," said President Yu Jun in a meeting with reporters after the company introduced the second generation of its GS5 crossover at the Paris auto show.

"Maybe in the first half of 2020 we will go to the U.S. market."

The shift serves as the latest example of how automakers are being blown off course by the tariffs, which had been 2.5 percent on cars and utility vehicles.

In August, Ford cited the tariffs in canceling plans to import the Focus Active to the United States from China.

General Motors has warned that it may drop the China-made Buick Envision from its lineup if it fails win a tariff exception from the U.S. government. Earlier, Volvo said it had begun shifting XC60 crossover production for the U.S. market to Europe from China to avoid the levies.

GAC's Yu noted that the company operates a design studio in Los Angeles and r&d operations in Silicon Valley and Detroit. Though the distribution strategy hasn't been decided, "we are considering having a network of dealers," he said.

"Because of the tariffs between the U.S. and China, we will consider how to make a good decision."

The debut of the GS5 in Paris signaled the company's desire to enter the European market in "the near future," said Yu.

He said that overseas sales now account for about 10 percent of the company's sales volume. The goal is for that figure to reach eventually 50 to 60 percent.

GAC Motor now operates in 16 countries.