China fuming over U.S. tariffs on tires
As Beijing launched a case Monday against new U.S. tariffs on Chinese tires, President Barack Obama defended the duties, saying trading agreements must be enforced in order for trading systems to work.
The conflict adds to a series of disputes over poultry, auto parts and other goods that have threatened to strain relations as Beijing and Washington cooperate on complex issues including the economic crisis and North Korea.
It comes as the two world powerhouses prepare for a global economic summit meeting next week in Pittsburgh.
News of China’s complaint filed with the World Trade Organization sent Asian markets down 2 percent and more Monday on worries about the potential impact on the global economic recovery. But investors appeared to take a less dire view of the dispute as the day wore on. U.S. markets were flat by midday.
While China’s quick response to Friday’s tariff decision threatened to escalate the battle, many economists said they expected that both sides would find a way to avoid a full-blown trade war.
Economists said that both nations have too much at stake economically to allow the dispute to get out of control.
The U.S. is a huge export market for Chinese products while China is the largest holder of U.S. Treasury securities.
The Chinese complaint to the WTO in Geneva triggers a 60-day WTO process in which the two sides are to try to resolve the dispute through negotiations. If that fails, China can request a WTO panel to investigate and rule on the case.
Beijing’s quick response to the tariff decision shows the urgency communist leaders attach to maintaining exports, employment and social stability. Officials have said as many as 30 million laborers lost factory jobs last year as exports plummeted. Many have found new employment, but the government is anxious to avert more job losses.
Frustration over the tire tariffs has been fanned by news reports citing a rubber industry group that said as many as 100,000 jobs could be affected and losses to Chinese producers could top $1 billion.
Obama approved the tire duties to slow the rapid growth of U.S. imports of Chinese-made tires blamed for the loss of thousands of American jobs. The order raised tariffs for three years on Chinese tires — by 35 percent in the first year, 30 percent in the second and 25 percent in the third.
On Sunday, Beijing announced it would investigate complaints that American auto and chicken products are being dumped in China or are benefiting from subsidies.