‘US tariffs don’t hurt’: Chongqing’s car sector a bright spot amid trade turmoil

CHONGQING – The US wants its tariffs to squeeze Chinese trade. Yet one sector has so far remained unfazed: car exports from south-western manufacturing hub Chongqing.

Industry players tell The Straits Times that Chongqing’s strong transport links to Asia and Europe pave the way for the cars to reach countries participating in the Belt and Road Initiative, the signature foreign policy initiative of President Xi Jinping.

“The US tariffs are not hurting us because our sales have always been to developing countries and regions,” said chief executive Molly Hu of Linghe Automotive, which sells second-hand electric cars and auto parts.

The company started in 2022 with a three-man unit to handle exports to Russia and Central Asia. Its export team now has 30 workers as it expanded sales to Central Europe, Latin America and the Middle East.

Chongqing is well placed to sell to these markets. To its west, it connects by road and rail to the Chinese autonomous region of Xinjiang, where trade routes extend towards Central Asia and Europe.

General manager Qi Yue at Sahiyoo, a parallel exporter for Chinese commercial electric vehicles (EVs) in Chongqing, said demand for space on the Chongqing-Xinjiang-Europe railway has become so high that goods have been delayed.

Sahiyoo then began targeting markets in South-east Asia, the Middle East and Latin America, which can be served by other routes such as the New International Land-Sea Trade Corridor that links Chongqing to countries including Laos, Myanmar and Vietnam.

“These new markets bear promising growth,” Mr Qi said, noting how Chinese cars are increasingly popular in South-east Asia.

Although far from the coast, Chongqing is home to China’s deepest inland port, traversed by the Yangtze, the longest river in Eurasia.

Cars from Chongqing can be shipped via the river to eastern ports such as Shanghai or southern ports like those in Guangxi, before heading to South-east Asia or distant markets in Latin America and Africa. 

Chongqing produces one in every eight cars in China, making it the country’s third-largest manufacturing hub for vehicles, following Guangdong and Anhui provinces.

Changan Automobile, one of China’s four largest carmakers, and Seres Group, which specialises in new energy vehicles and is tech giant Huawei’s car-making partner, are headquartered in Chongqing.

In 2024, Chongqing’s gross domestic product grew by 5.7 per cent – higher than the 5 per cent national average – on the back of strong growth in its automotive industry. The industry accounts for over 50 per cent of Chongqing’s industrial added value.

Chongqing party boss Yuan Jiajun said on April 21 that the city “strives to become a capital for intelligent electric cars”.

It aims to develop the smart EV industry by integrating technologies such as 5G and artificial intelligence, testing autonomous driving in ports and mines, and encouraging flying cars.

Luckily for Chongqing, the US is not a major market for Chinese cars.

“Although China has become the world’s largest exporter of automobiles, exports to the US accounted for only 1.8 per cent of China’s total automobile export volume,” said the south-west chapter of the European Union Chamber of Commerce in China.

“While the US tariffs have raised the cost for Chinese new energy vehicles to enter the US market, the overall impact on the industry is therefore quite limited,” it added. 

US President Donald Trump imposed duties of 145 per cent on goods from China in April, while Beijing has

retaliated with tariffs of 125 per cent

and other measures.

Companies tell ST that even before the latest hike, they had not been keen to sell new energy cars to the US because of blanket tariffs of at least 100 per cent. Instead, they prefer to break into markets in developing regions, particularly China’s neighbours and allies. 

Data from the China Association of Automobile Manufacturers shows that Russia, Mexico, the United Arab Emirates, Belgium and Saudi Arabia were the biggest importers of Chinese cars in 2024.

Mr Jarvis Du, who runs two logistics companies in Chongqing that exports cars to Uzbekistan and other countries in Central Asia, said sales have increased about four times since 2022. 

When he first visited Tashkent, the capital of Uzbekistan, in 2022, he found the cars and auto parts sold there were “as old as those made in the 1990s”.

The market then was hungry for newer and more modern designs, a gap that Chinese cars, with their sleeker models and better eco-friendly technologies, could fill. 

Combined with Central Asian governments’ desire to push for green technology to curb pollution, Chinese cars became a hit, Mr Du added. He is also vice-chairman of the Chongqing chapter at the Singapore Chamber of Commerce and Industry in China.

“The potential for growth for Chinese cars in Central Asia was and remains enormous,” he said. 

China is Central Asia’s largest trading partner and foreign investor, with the country mainly selling vehicles, electronics and machinery to the region.

In Kazakhstan, the region’s largest economy, China-made cars accounted for 39 per cent of the total number of vehicles sold in 2024, up from 10 per cent in 2021.

Some firms, however, are not as optimistic about their prospects, given the ongoing trade war with the US.

The south-west chapter of the EU Chamber of Commerce of China told ST that a member – a local logistics firm – had some orders cancelled due to the latest US tariffs “and they have not received new orders since”.

The chapter warned that “while there is less direct trade between western China and the US compared with eastern China, the (latest) tariffs will have an impact on all member companies exporting from China to the US, regardless of where they are based”.

It expects more of its members, including those in the automotive industry, to switch towards an “in China for China” model, referring to how companies are setting up in the country to target local buyers or producing items for the domestic market.

Previously, rising risks from global trade and other geopolitical tensions, as well as commercial reasons, had already pushed its member companies towards the move.

Linghe Automotive’s Ms Hu said she is concerned that the tariff war may dampen economic sentiment around the world.

“In some indirect ways, the gloomier sentiment, which can cause buyers to be more frugal as they are unsure of their job prospects, can possibly affect our sales,” she added.