The US Trade Representative has taken its case challenging China’s imposition of an anti-dumping duty on US-made automobiles to the World Trade Organization (WTO). At stake is more than $3 billion in duties that China now charges for certain models of US-made vehicles imported into China.
The first step in the case will be negotiations with China which can last up to 60 days. If no resolution is reached, a WTO panel may be requested to settle the dispute.
China imposed the duties on US-made vehicles in response to the Obama administration’s decision place a tariff on imports of Chinese-made automobile tires in late 2009. The US imposed a 35% duty on Chinese tires in an effort to cut import quantities and boost job creation at US tire makers like Goodyear Tire & Rubber Co. (NYSE: GT), among others.
Tire imports from China fell, but rose sharply from low-wage countries like Thailand, Indonesia, and Mexico, defeating the job creation aspect of the tariff. About all that happened is that imported tires now cost more.
China’s anti-dumping duties on US-made cars raises the price to Chinese consumers an amount that is nearly equal to the US tariff on Chinese-made tires. Both Ford Motor Co. (NYSE: F) and General Motors Co. (NYSE: GM) have sold more cars in China in 2012 than they did last year, although many of the cars are built in China and are not subject to the added costs.