By on April 4, 2011

The trade war that erupted between the US and China late last summer may have cooled to an angry simmer, but its effects are once again being noticed in the automotive industry. After President Obama slapped a 35% tariff on imports of Chinese-produced tires, the Chinese government started casting around for potential objects of retaliation, and, as Bertel reported, US auto exports to China made “a good tit-for-tat.” The US imported $1.8b worth of Chinese tires in 2009, while China imported $1.1b worth of US-built cars (including transplant brands) in 2008. You shoot our dog, we’ll kill your cat.”

Now, the Chinese Ministry of Commerce has concluded its “investigation” into US auto dumping and illegal subsidies  in the Chinese market, and it just so happens to single out the two automakers who are partially owned by the US. Coincidence? Not so much. [Hat Tip: Michael Banovsky]

Chinaautoweb reports the Chinese Commerce Ministry’s findings of dumping and subsidies for US-built “saloon cars and cross-country cars (of a cylinder capacity >2500cc)”  as follows:

Dumping margins of US-built vehicles, by manufacturer:

1. General Motors LLC, 9.9%

2. Chrysler Group LLC, 8.8%

3. Mercedes-Benz U.S. International, Inc.2.7%

4. BMW Manufacturing LLC, 2.0%

5. American Honda Motor Co, Inc. 4.4%

6. All Others, 21.5%

Ad valorem subsidy rates, by manufacturer:

1. General Motors LLC, 12.9%

2. Chrysler Group LLC, 6.2%

3. Mercedes-Benz U.S. International, Inc., 0%

4. BMW Manufacturing LLC, 0%

5. American Honda Motor Co, Inc. 0%

6. All Others 12.9%

The good news? At this point, the Chinese government has no immediate plans to introduce new duties on vehicle imports from the US. For now, the Commerce Ministry is collecting comments and evidence, and will make a policy recommendation based on review of that new evidence. Meanwhile, it’s still not clear how the Ministry determined these subsidy or dumping rates, so we’ll continue to examine their determination and seek out insight into its creation and consequences.

Ultimately though, Chinese imports of large-capacity US-built cars are small enough that this tussle will seriously affect neither the Chinese market nor GM and Chrysler. Of greater interest: the extent to which these two firms were targeted due to their US government ownership stakes. After all, if you’re going to retaliate in a trade war, why not attack the firms closest to the opposing government’s heart?

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4 Comments on “Trade War Watch 17: China Slams GM And Chrysler For Illegal Dumping, Subsidies...”

  • avatar

    I’ll swap our Afghanistan war with their war against free thinking.

  • avatar

    The Chinese are just playing by the Golden Rule; he who has the gold, makes the rules!

  • avatar

    Technically, GM & Chrysler were subsidized, and by definition you could make the argument they were dumping.  WTO legal definitions of government subsidies having been further refined recently with the Boeing subsidies by the US government to be also considered illegal.
    The question becomes, “so what are you going to do about it?”.  China? EU?
    Indeed, I’ve always assumed that other countries would use the US automotive bailouts as an excuse at some point in the future for their own subsides or tariffs.  Now, who’s the US to complain if China, or anyone else, subsidizes their own auto industry without sounding hypocritical.  This here is the sound of China loading its ammunition.

  • avatar

    Obama should have just made the tires illegal to import, because they really are that bad.

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