Analysis: China Toughens Trade Stance with Tariffs
(Reuters – Lucy Hornby)
China has fired a warning shot with its decision to impose tariffs on imports of sport-utility vehicles (SUV) and other large cars from the United States as both countries gear up for increased trade friction next year. The tariffs, announced on Wednesday and ranging from 2 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 U.S. 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.
“It’s a threat to companies, to say that you’d better lobby your government not to impose more tariffs because that could lead to a trade war and that’s going to hurt you here,” said Usha Haley, professor of international business at Massey University in New Zealand, who studies the Chinese auto sector. ”It’s an extremely effective way of working.” Read more here.
Date: December 16, 2011