Another day another exciting trade policy dispute as the United States files an official WTO grievance against Chinese tarriffs on certain automobiles made in America.
The controversy here goes back to the government-sponsored bailout of General Motors and Chrysler. The Chinese governments views that as a government subsidy to US car production and decided to slap tarriffs on cars imported from the United States in response. Most cars sold in China—including cars with American brands—are locally produced, but luxury cars and cars with engines over 2.5 liters are normally made in the USA and shipped overseas. I’ve never really understood the logic of “retaliating” against a country for the crime of sending you subsidized products, but countries do it all the time and China did it in this case. Now the Obama administration is trying to strike back with this WTO complaint.