Shares of U.S. automakers General Motors and Ford Motor Co. skidded on Wednesday after a Chinese official warned the government could slap a penalty on an unnamed U.S. automaker for monopolistic behavior.
The warning from a senior Chinese state planning official, conveyed through the official China Daily newspaper on Wednesday, came days after U.S. President-elect Donald Trump questioned the longstanding U.S. policy of acknowledging that Taiwan is part of “one China.”
Trump’s rhetorical challenges to long-established policy toward China have rattled U.S. corporations. Relying on stable U.S.-China relations for more than 40 years, the companies have ramped up sales in China and developed complex supply chains that feed Chinese-made parts to their U.S. operations.
Chinese officials have demonstrated they will use regulatory sanctions against U.S. corporations during times of diplomatic discord.
GM shares slumped 3.2%, while Ford was down 1.4% as the wider Dow Jones industrial average slipped. Shares of both companies have rebounded slightly, but are still down for the day.
In a statement on Wednesday, GM (gm) did not say directly whether it was under investigation by Chinese authorities. “GM fully respects local laws and regulations wherever we operate,” the company said. “We do not comment on media speculation.”
A spokesman for Ford’s Asia-Pacific operations said the company was “unaware of the issue.”
The China Daily quoted Zhang Handong, director of the National Development and Reform Commission’s (NDRC) price supervision bureau, as saying investigators had found that a U.S. auto company had instructed distributors to fix prices starting in 2014.
The China Daily article did not give further details and the NDRC did not respond to requests for comment.
How the Trump Trade Will Affect Stocks and Bonds
There are many ways that China could retaliate against the United States, including leveraging its holdings of $1.19 trillion of U.S. treasuries in September.
In an editorial, the China Daily urged Trump to recognize the importance of close economic ties between China and the United States.
“For the American economy to be great again … the U.S. needs to cement its economic relations with China, rather than destroy them,” the editorial said.
China, the world’s largest vehicle market, is crucial to GM. Chinese consumers bought more than one-third of the 9.96 million vehicles GM sold globally in 2015. Profits from Chinese operations, including joint ventures, accounted for about 20% of GM’s global net income of $9.7 billion in 2015.
Ford’s China joint ventures represented about 16% of its global pretax profit of $9.4 billion in 2015.
“This action is just a hint as to how much power China wields,” said Michael Dunne, president of Dunne Automotive and a veteran of the Chinese auto industry. “A small fine of several million dollars is likely. The message is, ‘If you want to play, we can play.'”
While Zhang’s comments to the China Daily appeared just days after Trump’s remarks, people familiar with the situation said Chinese officials have been cracking down on what they have called monopolistic behavior by foreign automakers and dealers for several years.
If the NDRC levies a new penalty it would be the second this month and the seventh issued to automakers since the commission began anti-monopoly investigations in 2011, the China Daily said.
Targeted firms have included Audi AG, Daimler AG’s Mercedes-Benz and Toyota Motor Corp, and one of Nissan Motor Co Ltd’s joint ventures.
“I don’t think the NDRC had only made a decision two weeks ago or a week ago. This is a long-term plan for them,” a source at a government-affiliated industry association said.
Analysts said on Wednesday that a separate Chinese action would undercut confidence in the Chinese auto market outlook.
Separately, China will extend a tax cut on small-engine vehicles to 2017, two sources told Reuters, a move that could prevent a predicted steep drop-off in sales.