The European Union has been told by the World Trade Organization to stop levying import duties on Chinese screws, nuts and bolts.
The BBC reports the ruling marks the first time the trade organisation has ruled against the EU in favour of China.
A panel of WTO experts said the EU's import duties broke trade rules and said they must be revised.
According to WTO rules, both sides now have 60 days to appeal the ruling.
The EU imposes duties on imports from countries such as China, Vietnam or Cuba, which it does not consider to be market economies.
The BBC reports that WTO rules allow for extra duties where imports are sold at less than they would cost in the country of origin, a process known as "dumping".
The Chinese claim stated that the EU had wrongly calculated the threshold, a complaint the WTO upheld.