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Experts say tire tariffs could worsen U.S.-China trade relations
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15:14, September 15, 2009

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 Experts say tire tariffs could worsen U.S.-China trade relations
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The new U.S. tariffs on Chinese tire imports could escalate trade disputes between the two countries but a full-blown trade war is unlikely, experts say.

The issue is especially thorny in light of the ongoing global economic downturn in which China is sensitive to trade barriers for its exports and U.S. labor unions are wary of foreign imports amid mounting unemployment, which currently stands at close to one in 10.

U.S. President Barack Obama signed an order on Friday last week to enact a three-year tariff that takes effect in two weeks. The move would slap a 35-percent duty on Chinese tire imports the first year, dropping to 30 percent and 25 percent in the second and third years, the White House announced.

The decision, which came in the run-up to this month's Group of 20 summit in Pittsburgh, where Obama wants to show his support for free trade, is the president's first major provision aimed at protecting a U.S. industry from Chinese competition. It also comes ahead of Obama's November visit to Beijing.

Jennifer Richmond, China director at Stratfor, a global intelligence company, said the tariffs could lead to further actions on both sides. The two nations have seen tiffs in the past,"(but) if you weigh all political and economic flash points ... this has the potential to be one of the more difficult points in U.S.-China relations."

China's commerce ministry announced on Sunday that it would start investigations into whether the United States is subsidizing automotive and chicken meat exports to China. While the ministry made no mention of the U.S. decision, U.S. media have noted the timing of the announcement.

The Chinese foreign ministry has also voiced its disapproval of the U.S. tariff measure.

"We hereby express our strong discontent and firm opposition to the U.S. decision, which was made regardless of China's strong stance," said ministry spokeswoman Jiang Yu in a statement.

The Obama decision represented a failure of the United States to honor commitments made at the G20 financial summit, she said, calling the action "trade protectionism" and saying the United States "abused trade remedy measures." The action would undermine U.S.-China trade ties, as well as inhibit the global economic rebound, the spokeswoman said.

The White House, however, stood by the president's decision. "The president decided to remedy the clear disruption to the U.S. tire industry based on the facts and the law in this case," said White House spokesman Robert Gibbs in a statement.

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