A full-blown trade row erupted between the US and China after Beijing accused Washington of “rampant protectionism” for imposing heavy duties on imported Chinese tyres and threatened action against imports of US poultry and vehicles.
Trade relations between two of the world’s biggest economies deteriorated after Barack Obama, US president, signed an order late on Friday to impose a new duty of 35% on Chinese tyre imports on top of an existing 4% tariff.
In his first big test on world trade ever since taking office in January, Mr Obama sided with America’s trade unions, which have complained that a “surge” in imports of Chinese-made tyres ad caused 7000 job losses among US factory workers.
Chen Deming, China’s minister of commerce, condemned the decision, saying that it “sends the wrong signal to the world” at a time when Washington and Beijing should be co-operating to deal with the worst economic and financial crisis in decades. China said it would now investigate imports of US poultry and vehicles, responding to complaints from domestic companies.
The US warned Beijing against taking retaliatory action. an official from the Office of the United States Trade Representative said that the retaliation would be inappropriate, as the US acted entirely within the bounds of trade laws and within the safeguard provision that China itself agreed to upon accession to the WTO. The official said that enforcing trade agreements and laws was “critical” to maintaining free markets. Another official said the US had “negotiated” to the end with the Chinese to come up with something we could all agree to.
US officials said that they were scrutinizing the export of poultry and vehicles, but said any action in reliation by China could result in a complaint by the US to the WTO.