China slaps tit-for-tat tariffs on US automakers

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A mechanic works on a Buick at a General Motors dealership in Shanghai last week. Photo - Peter Parks/AFP

China has announced its plans to impose anti-dumping duties on some US-imported vehicles with engine capacity above 2.5 litres. The Ministry of Commerce in a statement Wednesday said several US companies including General Motors, Chrysler Group ?and American Honda Motor Co. are engaged in dumping and subsidising.

The announced tariffs vary depending on automakers. China is intent on hitting GM the most as it plans on charging 12.9 per cent tariff while Chrysler Group escapes with 8.8 per cent duty. The US units of Bayerische Motoren Werke AG (BMW) and Daimler AG will face duties of 2 and 2.7 per cent respectively.

Domestic manufacturers of sedans and sport-utility vehicles with engine sizes above 2.5 litres are “materially threatened” by imports from the US, it said.

SWEET REVENGE

China said it was looking over its ‘home interests? but some analysts say it is pure revenge and not protection.

?It?s more of a tit-for-tat thing – they?ve been slapping duties on each other for a while now,? said Namrita Chow, a senior analyst at IHS Automotive in Shanghai.

?This is hardly going to flummox the buyer of a high-end car. They?re really not going to be bothered by a few percent here and there.?

The move comes three months after World Trade Organisation rejected China?s appeal of a ruling that backed US duties on tyre imports.

WTO rejected China?s appeal in September of a ruling made by world trade body judges last December which found US tariffs on $1.8 billion of car and light truck tires from China legal. The duties, as much as 35 per cent, were imposed by President Obama in September 2009 under so-called safeguard provisions designed to protect US producers from an influx of imports.

China said it regretted the decision and urged the United States to scrap the tariff to ensure fair competition. It also insisted the measures did not help to reduce US imports of tyres, but merely pushed China out of the market.

“It was a protectionist measure and unsupported by the US tyre industry. The safeguard measure does not help reducing US tyre imports, but injures China’s legitimate trading interests,” Chinese trade mission in Geneva said in a statement.

EUROPE UNHAPPY

The move does not seem to make even the European carmakers happy. Europe is roiling with its own turmoil and China?s insensitivity seems to be adding more fuel to the fire.

BMW, among other European automakers, is concerned that higher duties might deter sales in the world?s largest car market. However, the picture does not look comforting.

Automobile sales in the US have slowed down this year from last year?s record 32% expansion pace as inflation rose to record levels. Higher interest rates and the end of a two year stimulus plan also deterred purchases. According to the auto industry group,?deliveries for 2011 may climb the least in 13 years, adding to signs that Chinese economy is slowing down.

BMW and Daimler?s Mercedes-Benz both build sport-utility vehicles at US factories for global export. BMW is expanding its factory in South Carolina to produce as many as 300,000 X5, X6, and X3 SUVs next year from 270,000 in 2011.

The Daimler unit plans to invest $2.4 billion between 2010 and 2014 at its plant in Alabama to add equipment for the assembly of the C-Class sedan. The company currently makes the M-Class and GL SUVs as well as the R-Class wagon at the site. The plant produced 125,400 vehicles in 2010.

Bloomberg said BMW does not expect the new import duties to have a significant impact on its sales in China. The spokesman for the company Mathias Schmidt called the tariffs ?regrettable?. Daimler Mercedes is reviewing the potential impact from the duties, spokeswoman Bettina Singhartinger said in response.

(Written By Rizana Jahan; Edited by Moign Khawaja)

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