The tension between America and China over international trade escalated on Wednesday when Beijing imposed additional duties on cars imported from the United States.
China's commerce ministry accused America's car industry of "dumping and subsidising", thereby causing substantial damage to China's domestic car industry. From Thursday, levies will be charged on larger-engined cars from several manufacturers, some being European firms with factories in the US.
General Motors faces the greatest impact, almost 22% extra on some sports utility vehicles (SUVs) and other cars with engine capacities above 2.5 litres. Chrysler faces a 15% penalty, while a 2% levy will be imposed on BMW, whose US plants make many of the cars it exports to China.
Existing taxes and duties already push up the cost of US imports by 25%, and the new levies make it even more expensive for Chinese consumers to buy American. The move was swiftly attacked in the US. Carl Levin, the Democratic senator for Michigan (which includes the motor city of Detroit), called it an "unjustified" attempt to circumvent international trade laws. "Instead of ending its unlawful trade practices, China is choosing to take further steps that are unauthorised by world trade rules," he claimed."The livelihoods of American families and the integrity of global trade law are at stake."
GM says the levies will have little immediate impact, as it mostly exports lower-power cars to China. Analysts, though, said the decision underlined China's determination to protect its car industry.
"The move shows that China is always capable of intervening politically in its markets," Juergen Pieper of Bankhaus Metzler, the German investment bank, told Bloomberg. Georges Dieng, a Paris-based analyst with Natixis Securities, said the levies had been set to "inflict pain on the Americans, above all". Shares in General Motors fell by over 3%, while BMW's shares slipped 5%.
China and the US have peppered each other with legal actions and tariffs over the past few years.
Earlier this month, the US International Trade Commission ruled against China's solar-power industry after an anti-dumping and anti-subsidy investigation. Last week, the US pledged to take China's anti-dumping measures against American poultry imports to the World Trade Organisation.
Debbie Stabenow, the junior senator for Michigan, urged the US government to take China's car levies to the WTO as well. "China relentlessly breaks international trade rules, and seeks to gain an anti-competitive advantage over our companies and workers. America must be equally relentless in fighting back," she said.
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