From AAIA Capital Report
 
On Dec. 14, China’s Ministry of Commerce (MOFCOM) announced it would impose antidumping and countervailing duties on imported automobiles manufactured in the United States. These newly imposed duties began on Dec. 15, will remain in effect for two years and will include vehicles with engines 2.5 liters and larger that are produced by General Motors, Chrysler and the U.S.-based subsidiaries of Honda, BMW and Mercedes-Benz.
 
According to MOFCOM, China hopes to protect its domestic automakers from lasting damage brought on by the dumped and subsidized American imports. Some of the punitive duties are as high as 12.9 percent for General Motors and 8.9 percent for Chrysler.
 
This action taken by China’s government marks the latest development in escalating trade tensions between the two countries. The United States Trade Representative (USTR) is disputing China’s assertion that the decision to impose antidumping and countervailing duties on U.S.-made automobiles was the result of an investigation, which the WTO rules is obligatory in order to justify these types of punitive duties. Instead, USTR contends that China acted with a retaliatory motive based on the imposition by the U.S. in 2009 of tariffs on some Chinese-made tires. Three months ago, the World Trade Organization (WTO) rejected China’s appeal challenging the tire tariffs.
 
Regardless of the allegations on both sides, it is likely that the Chinese government has been feeling the pressure from its domestic groups as auto sales for Chinese automakers remain stagnant while U.S. automakers continue to post substantial gains. At a Dec. 15 press conference in Geneva during the WTO’s three-day ministerial conference, Chinese Minister of Commerce Chen Deming, confident that the imposed duties comply with WTO requirements, defended his country’s decision, but admitted that the United States has the right to dispute the measure.