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Exports of South Carolina-made BMWs drop again in face of China tariffs

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BMWs ready for export (copy) (copy)

Rows of South Carolina-made BMWs wait to be shipped overseas from the Port of Charleston. BMW exports have declined by 21.1 percent since China imposed retaliatory tariffs on U.S.-made vehicles. File

Exports of BMW vehicles through the Port of Charleston declined again in October as the automaker said it plans to move more production of crossovers for the Chinese market, possibly its popular X5 SUV, to China.

The company's plant in Spartanburg County, its largest, exported 13,702 vehicles to foreign markets in October — a 16 percent drop from the same month a year ago and the fourth consecutive monthly decline, according to statistics from the State Ports Authority.

"In recent weeks and months, our business environment has become a lot more difficult," Harald Kruger, BMW's chairman, said during a conference call with analysts this month.

Meanwhile, a new round of proposed tariffs could make it even more difficult — and expensive — for BMW and other automotive manufacturers in the United States to do business.

President Donald Trump last week delayed imposing tariffs of up to 25 percent on imported cars and automobile parts — such as the engines and drive trains BMW installs on SUVs built at its Upstate campus — while he waits for more information from the U.S. Commerce Department's investigation into whether such imports pose a national security concern. The agency's report is due Feb. 17 and Trump would have 90 days after that to take action.

The Ann Arbor, Mich.-based Center for Automotive Research says the import taxes would add nearly $2,300 to the price of a U.S.-made car while reducing sales by 2 million vehicles per year.

"The proposed U.S. import tariffs will hurt the United States economy more than they will harm our trading partners," Kristin Dziczek, the center's vice president for industry, labor and economics, said in a report.

Kruger said trade disputes are "straining the entire global economy."

China historically has been the biggest market for South Carolina-made BMWs, with about 22 percent of annual production at the Upstate plant sent to that country.

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The automaker this month announced plans to add production of another SUV in China, with the specific model to be determined in coming weeks. BMW already builds X3 models for Chinese consumers at a plant in Shenyang. The automaker's X5 was the most popular U.S.-made car sold in China in 2017 and localizing production of such a high-volume seller would reduce tariff expenses.

China in July imposed 40 percent tariffs on U.S.-made vehicles in retaliation for similar import taxes on Chinese goods enacted by Trump. The tariffs will cost BMW nearly $350 million this year and contributed to the automaker's decision to cut its profit guidance to below 8 percent for the first time since 2009. 

In the four months since those tariffs went into effect, BMW exports from Charleston have declined by 21.2 percent. Jim Newsome, president of the ports authority, said he expects exports of a redesigned X5 eventually will help stem the decline. But BMW exports tumbled by double digits in October, the first full month of X5 shipments.

Fewer exports aren't translating into less production at the Greer factory, as domestic sales — particularly of the X3, which is no longer exported to China — have picked up the slack. Since July, production at the Upstate site is 2.5 percent behind 2017 totals despite a plant upgrade for new models that disrupted some work. BMW currently makes the X3, X4, X5, X6 and X7 at the Upstate plant.

BMW, the No. 1 exporter of U.S. made vehicles, says it is committed to South Carolina, with a planned $600 million in improvements under way at the plant that employs about 10,000 people and supports thousands of supplier jobs statewide. But company spokesman Kenn Sparks warned that tariffs could undermine BMW's competitiveness and sales.

"The result," Sparks said, "could be strongly reduced export volumes with negative effects on investments and jobs in the U.S."

BMW isn't the only South Carolina automaker to sound alarms over tariffs impacting jobs. Volvo Cars, which makes S60 sedans at its $1.1 billion manufacturing campus near Ridgeville, said it will not export those cars to China because of the tariffs and won't need to hire 4,000 people as originally planned if the import taxes stay in effect long term.

Volvo is scheduled to begin exporting South Carolina-made cars to foreign countries during the first quarter of next year.

Reach David Wren at 843-937-5550 or on Twitter at @David_Wren_

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