Chinese trade practices attacked

Duties up to 22 percent imposed on U.S. autos

WASHINGTON – U.S.-China trade tensions are starting to heat up, an especially ominous development as global export growth is slowing and both countries face significant political showdowns at home next year.

China fired the latest salvo this week by imposing duties as high as 22 percent on imports of large cars and sport utility vehicles from the U.S. for the next two years.

Beijing alleged dumping and improper U.S. government subsidies, the same charges that Washington has made about Chinese exports of solar panels to the U.S.

The practical effect of the Chinese tariffs is minor: U.S. shipments of motor vehicles to China last year totaled just $3.5 billion – nearly 4 percent of American exports to China and less than 0.3 percent of all U.S. exports.

The new tariff is in addition to an existing 25 percent duty on imported vehicles in China, so the new levy probably won’t make much difference to Chinese buyers, analysts said.

Nonetheless, American shipments of SUVs and other cars to China represent one of the fastest-growing export segments and among the most politically sensitive. Analysts worry that the Chinese action will add fuel to already rising tensions between the two countries.

John Bryson, the new U.S. commerce secretary, had some tough words Thursday for Beijing, although he did not refer directly to the new tariff.

“The United States has reached a point where we cannot quietly accept China ignoring many of the trade rules,” he said in remarks prepared for the U.S. Chamber of Commerce. “China still substantially subsidizes its own companies, discriminates against foreign companies and has poor intellectual-property protections.”

Bryson said that Chinese officials at recent negotiations “made promising commitments in some of these areas. But we must see follow-through. We cannot rely just on words.”

China’s Ministry of Commerce, in announcing the new tariffs, said the U.S.-produced vehicles that had benefited from alleged subsidies and dumping had “substantially damaged China’s auto industry.” The ministry said General Motors Co. and Chrysler Group would be hit with the highest duties.

“China should strike back in its own good time as the U.S. always stirs up investigations targeting China by routinely using trade remedy measures,” Li Zhongzhou, a former official from the Ministry of Commerce, was quoted as saying by the official New China News Agency.

GM and other car companies said they were studying China’s action. Industry analysts said BMW, which produces SUVs in South Carolina, was likely to feel the most pain because it exports more from the U.S. than American car companies.

As such, analysts said, the tariffs won’t have an effect on U.S. carmakers’ bottom line.

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