China raises import duty on US cars

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China raises import duty on US cars

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China is to impose extra duties on cars imported from the United States in a move bound to ratchet up tension between Washington and Beijing.

General Motors, Chrysler and BMW will all be affected. China says its own domestic car industry is being damaged by subsidised US exports.

The tariffs, ranging from two percent to 22 percent, are unlikely to inflict much pain on American carmakers, who generally only import a small fraction of what they sell in China.

But by hitting a powerful industry that has benefited from a US government bailout, China can signal a tough stance in the face of rising pressure over its trade practices while at the same time pressuring American companies into lobbying on its behalf.

China’s move comes as the United States — increasingly frustrated with a mammoth trade deficit and what it calls unfair treatment of US companies in China — changes its own tactics.

Instead of focusing on dumping of cheap Chinese-made goods, it is building a case that China’s support for state-owned firms — from discounted land and electricity prices to loans that can be perpetually rolled — violates World Trade Organisation rules.