China hits back in US tariffs row

“This is an abuse of special safeguard provisions and sends the wrong signal to the world,” Chen said.

The Chinese authorities said in a statement: “In line with national laws and World Trade Organisation rules, the commerce ministry has started an anti-dumping and anti-subsidy examination of some imported US car products and chicken meat.”

Producers’ complaints

The ministry said the investigation of imported US cars and chicken was in line with World Trade Organisation rules, and launched in response to complaints from Chinese producers.

What is dumping?

Dumping is an informal name for the practice of selling a product in a foreign country for less than either the price in the domestic market or the cost of making the product.   To protect local industries, it is illegal in some countries to dump certain products into them.

The official China Daily quoted Fan Rende, head of the China Rubber Industry Association, as saying the US tariffs on Chinese tyres could lead to the loss of 100,000 jobs in China.

The newspaper reported strong support among Chinese firms and economists for retaliatory measures against the US.

“We could levy higher tariffs on tyres and automobiles imported from the US,” it quoted He Weiwen, of the China Society for American Economic Studies, as saying.

“China should not let the US car firms make easy money from its vast car market. We should teach them a lesson.”

The US trade deficit with China totalled $103bn in the first half of 2009, down 13 per cent from the same period last year.

US tyre tariff

The White House announced on Friday that President Barack Obama had imposed a 35-per-cent tariff on tyres imported from China amid a trade complaint by a major US union.

Obama authorised the additional duties on tyre imports from China for three years “in order to remedy a market disruption cause by a surge in tyre imports”.

special report

The new tariffs will begin with a 35-per-cent duty the first year and decrease to 30 per cent the second year and 25 per cent the third year tariff.

The additional tariff comes on top of an existing four per cent duty.

The United Steelworkers union had complained of dumping of Chinese-made tyres.

The US International Trade Commission had found the products were being imported in the US in a way that threatened domestic producers and the group had recommended even higher tariffs of 55 per cent.

The union is a key constituency of Obama and he has sought their support in fighting to overhaul the US healthcare system.

US tyre manufacturers, many of whom also have plants in China, had not sought the tariffs. The imports amount to $1.8bn annually.

‘Dangerous signal’

In the wake of the imposition of the tyre tariffs, Jiang Yu, a foreign ministry spokeswoman, said the move sent a dangerous protectionist signal.

“This is going to damage financial and trade co-operation between China and the United States, and does not help push the world economy towards an early recovery,” Jiang said in a statement posted on the ministry website.

China and the US have vowed to co-operate in seeking to revive global economic growth.

But the tyre dispute has brought continued friction over trade into focus, which could spill into the G20 summit this month and Obama’s scheduled visit to China in November.

Jiang said China had already had stern talks with US officials, and reserved the right to take further countermeasures.