China Will Hit United States Auto Imports with Duties

[2011-12-15 10:08:55]


China will impose punitive duties of up to 22 percent on large cars and SUVs exported from the United States, China's Commerce Ministry said on Dec. 14, 2011, the latest in a series of trade disputes between the world's two largest economies.

The new duties take aim at vehicle exports valued near $4 billion this year and models that include the Cadillac Escalade made by General Motors Co, the Jeep Grand Cherokee from Fiat SpA affiliate Chrysler Group LLC and SUVs from Daimler AG's Mercedes and BMW AG.

China's action comes at an awkward time for U.S.-China relations, with China's currency and trade policies becoming a focus of criticism for U.S. presidential candidates and as China's growing diplomatic and military influence raises concern in the region and beyond.

Chinese officials said the U.S.-built SUVs and large cars were being dumped on the Chinese market and causing "substantial damage to China's domestic industry." Vehicle exports to China had already been subject to a 25 percent tariff and the new tariff will be in addition to that duty.

The decision by Beijing to impose the additional levy comes after China lost a two-year fight over tire exports to the United States in September.

A World Trade Organization ruling favored an Obama administration proposal to sharply increase duties on Chinese tires, rejecting an appeal that the 2009 move was protectionist and would hurt China's tire industry.

"We are very disappointed in this action by China," U.S. Trade Representative spokeswoman Carol Guthrie said.

Sen. Debbie Stabenow, a Democrat who represents Michigan, called on the USTR to challenge the China tariffs at the WTO.

"China relentlessly breaks international trade rules and seeks to gain an anti-competitive advantage over our companies and workers. America must be equally relentless in fighting back," Stabenow said.

Four senior lawmakers in the House of Representatives also urged USTR to take action, calling the duties "unjustifiable" and "one more instance of impermissible Chinese retaliation against the United States and other trading partners."

The group included Michigan representatives Dave Camp and Sander Levin, the top Republican and Democrat respectively on the House Ways and Means Committee.

The new duties on American-made large cars and SUVs range from a 2 percent levy on BMW models to 15 percent for Chrysler and almost 22 percent for GM. Ford Motor Co does not export U.S. built vehicles to China.

"Clearly, the intention was to inflict pain on the Americans above all," said Georges Dieng, a Paris-based analyst with Natixis Securities.

U.S.-China trade tension has been increasing in recent months, particularly in the solar industry, where tit-for-tat investigations into accusations of unfair practices have underscored leaders' warnings of rising protectionism amid gloomy global economic forecasts.

Mercedes builds its M-Class, R-Class and GL-Class SUVs for the U.S. market and export at a factory in Alabama. About 10 percent of that plant's output - or 16,000 vehicles - is shipped to China.

"We hope that we can find a quick solution," said Daimler spokesman Han Tjan.

BMW, which exports the X3, X5 and X6 sport utility vehicle from South Carolina, said it did not expect the new tariff to have a "significant impact" on its business in China. "We are less affected than other manufacturers, and we are not unprepared for the measure," a BMW spokeswoman told Reuters.

BMW sells about 70 percent of the SUVs made in South Carolina to markets outside the United States, said spokesman Kenn Sparks.
Source: Retuers
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