The World Trade Organization (WTO) has declared illegal tariffs imposed by China on US luxury car exports over the past two years.

A WTO panel found no basis for the punitive duties China levied between 2011 and 2013. Taxes imposed by China on U.S. luxury cars were as high as 21.5 percent. The US said $5 billion worth of US-made luxury cars of exports were illegally taxed by China in 2013.

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The US described the WTO ruling as a "significant victory." It said China had acted inconsistently in imposing anti-dumping tariffs in violation of its WTO commitments.

China levied tariffs on US-made saloons and off-road vehicles with an engine capacity of 2.5 liters or more in apparent retaliation for US trade policies. It argued that US carmakers were receiving government subsidies in order to flood the Chinese market with cheap luxury cars that hurt China's car industry.

The US, however, said China imposed the duties without following WTO rules and filed the case with the organization. It pushed ahead with the case in order to establish the precedent that China's actions violated WTO trade rules.

"The message is clear. China must follow the rules, just like other WTO members," said US Trade Representative Michael Froman.

The timing of the ruling is ominous. It comes barely a week after the US Department of Justice charged five Chinese military officers with hacking into computer systems of American firms to steal American trade secrets.

The WTO ruling against China will likely stoke tensions between Beijing and Washington already under stress from the hacking scandal.

The US contended that China's tariffs were imposed in retaliation for punitive tariffs it levied on Chinese-made tires.

This is the third time that the United States has won in a WTO dispute challenging China's illegal tariffs. The two other American wins were about American specialty steel products and chicken broiler parts.

Still pending before the WTO is a second auto case filed by the US in 2012. The US is challenging export subsidies China provides its own car and auto parts manufacturers.