Trade War Watch 17: China Slams GM And Chrysler For Illegal Dumping, Subsidies

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?