BEIJING (Sept. 11, 2009)—In response to a ruling last year from the World Trade Organization, China is reducing the tariffs it places on imported auto parts.
Typically China charges 10 percent on auto parts. In April 2005, however, the Chinese government raised the rate to 25 percent—the rate it levies on imported, finished vehicles—on those parts that make up 60 percent or more of the value of a vehicle finished in China.
The U.S., Canada and the European Union protested the higher tariffs to the WTO's Dispute Settlement Body, arguing they were inconsistent with WTO rules. In July 2008, the WTO ruled in the protesting nations' favor. China appealed, but the WTO appeals board upheld the original verdict.
Official Chinese news sources quoted local analysts as saying the tariff reduction would make little difference to the Chinese market for imported auto parts because Chinese auto makers already source about 70 percent of their parts from abroad.
China is waiting for President Obama's decision on whether to follow the U.S. International Trade Commission's recommendation to order steep tariffs on tires imported from China. The tariffs would be 55 percent the first year, 45 percent the second and 35 percent the third.
China has protested the pending tariffs, as have U.S. tire retailers, distributors and manufacturers such as Cooper Tire & Rubber Co. and Toyo Tire U.S.A. Inc. However, the United Steelworkers supports the tariffs, backed by other unions and industries and about 30 members of Congress.