U.S. tire duties fuel trade tension with China
A U.S. decision to impose special duties on Chinese tires could trigger a host of trade complaints against Chinese products and a backlash from Beijing, creating tensions as Western nations seek China’s support at a G20 meeting.
China responded swiftly to President Barack Obama’s announcement Friday of safeguard duties on tire imports from China, saying on Monday it would request World Trade Organization consultations with the U.S. over the duties.
It also announced its own anti-dumping investigations of chicken products from the United States, a trade worth $800 million a year, as well as U.S. automotive exports.
Looming in the United States are complaints about products ranging from electric blankets to a steelmaking ingredient, while Chinese and European trade negotiators are gearing up for a fight over shoes.
Obama, in a speech on Wall Street, said he was committed to expanding world trade and denied protectionist intent.
“When, as happened this weekend, we invoke provisions of existing agreements, we do so not to be provocative or to promote self-defeating protectionism,” he said.
“We do so because enforcing trade agreements is part and parcel of maintaining an open and free trading system.”
The United Steelworkers union filed the tire protection petition earlier this year. It said a tripling of Chinese tire imports from 2004 to 2008 had cost more than 5,000 U.S. jobs.
The U.S. trade deficit with China totaled $103 billion in the first half of 2009, down 13 percent from last year but it has grown considerably over the last decade.
The imbalance is a source of much ire in Washington and the rest of the country.
U.S. Agriculture Secretary Tom Vilsack said the Obama administration will strongly object to any attempt by China to retaliate against chicken exports.
“There is no reason why another country should try to even the scale, if you will, by focusing on agricultural products,” Vilsack told a National Farmers Union conference.
Stocks on Wall Street slipped shortly after the opening bell on Monday in part over concerns about the trade dispute but finished squarely ahead, with the Dow industrials up 19 points to 9,624. U.S. tire makers Goodyear Tire & Rubber Co and Cooper Tire & Rubber Co ended higher.
NO FULL-SCALE TRADE WAR
While the intensified sparring between two of the world’s biggest economies could trigger a bout of nerves in financial markets, it is unlikely to spiral into a full-scale trade war.