China's Car Exports Under Pressure as Trump Tariffs Roil Overseas Markets

China's Car Exports Struggle with New Tariff Challenges

BEIJING (Reuters) -China's car exports will likely face greater than forecast pressure this year as U.S. tariff hikes hit the economies of important overseas markets hard, potentially curbing consumer demand, a Chinese auto industry association said on Wednesday.

China ships very few cars to the United States, which imposed a 100% tariff on imported Chinese electric vehicles under the previous administration of President Joe Biden.

However, Cui Dongshu, the secretary general of the China Passenger Car Association (CPCA), said the sweeping tariffs announced by President Donald Trump last week were expected to have a major indirect impact on export sales.

"The abrupt hike in U.S. tariffs will have a disastrous impact on economies such as Southeast Asia, and thus our exports to these markets will be impacted more than expected," Cui said.

Southeast Asian nations were hit with some of Trump's heftiest tariffs.

Cui said automakers should also be cautious about expansion plans in the United States' southern neighbour Mexico, which is also in the crosshairs of Trump's tariff offensive.

He warned of a potential decline in car exports, a downward revision from a January forecast that had already foreseen export growth cooling to 10% this year from 25% in 2024 when China was the world's top exporter for a second year running.

Car exports fell 8% in March from a year earlier, reversing an 11% increase in February, CPCA data showed. Notably, joint ventures and luxury brands exported 47,000 vehicles last month, down 45% year-on-year.

Exports of Trump adviser Elon Musk's Tesla EVs produced at its Shanghai plant slumped 82.4% to 4,701 vehicles in March. Its exports of China-made vehicles were down 56.9% year-on-year to 38,147 in the first quarter, per CPCA data.

Domestically, car sales rose 14.4% in March from a year earlier, as government-subsidised trade-ins bolstered demand for EVs and plug-in hybrids, despite deepening deflationary pressures in the world's largest auto market.

Passenger vehicle sales hit 1.97 million units last month, and were up 6.1% to 5.18 million units in the first quarter, according to CPCA.

EVs and plug-in hybrids outsold gasoline cars for the first time in four months to make up 50.4% of overall sales in March.

The program, likened to the U.S. "cash-for-clunkers" stimulus, rewards a shift toward EVs with higher subsidies and had covered 2 million cars as of early this year, as households remained cautious about spending amid job and income worries.

Chinese EV giant BYD, reliant on its home market for 90% of global sales, beat Tesla in global EV deliveries for the second straight quarter in the January-March period.

(Reporting by Qiaoyi Li, Zhang Yan and Brenda Goh; Editing by Bernadette Baum, Louise Heavens and Joe Bavier)