U.S.-China Frictions Escalate Over Tire Tariff

A trade row between the U.S. and China seems to be escalating. On Friday, the Obama administration announced it would increase tariffs on imports of Chinese tires. On Sunday, Beijing said it's investigating possible restrictions on imports of U.S. poultry and automotive products. Observers worry that a tit-for-tat trade war could slow any global economic recovery.


The U.S. and China also appear to be out of sync. These are two of the world's largest trading partners, but a trade battle may be brewing. The Obama administration announced last Friday that it was imposing major tariffs on tires imported from China. Today, China filed a formal complaint against the U.S. at the World Trade Organization in Geneva. Some worry that a tit-for-tat trade war could slow any recover of the global economy.

NPR's Anthony Kuhn reports from Beijing.

ANTHONY KUHN: Now that China has filed a complaint, the U.S. and China have 60 days to reach an agreement. If that fails, China can request a WTO ruling. Yesterday, Beijing said it would investigate the possibility of anti-dumping measures against U.S. poultry and automotive imports, although it denied this was a form of retaliation. Still, the U.S. tire tariffs have provoked an angry outcry from Chinese officials, Internet users and tire companies.

Deng Yali is secretary general of the Chinese Rubber Industry Association, which has lobbied Washington not to raise the tire tariffs.

Ms. DENG YALI (Secretary General, Chinese Rubber Industry Association): (Through Translator) These restrictions could affect $2 billion worth of our tire exports and 100,000 workers in Chinese tire industries. I'm not saying they'll all be laid off, but it will have an effect on their livelihoods.

KUHN: The Obama administration decided to raise import duties on Chinese tires by 35 percent from a current 4 percent in response to a petition from the United Steelworkers Union. The petition said that Chinese tire exports to the U.S. surged 215 percent between 2004 and 2008, while the U.S. tire industry shed 4,400 jobs. Deng Yali insists that this is not China's fault.

Ms. YALI: (Through Translator) It's the U.S. that's being unfair here. Our companies do business according to World Trade Organization rules. Our products are good quality and reasonably priced. The real reason for this is that the American economy is in decline, and the unions are looking for an excuse.

KUHN: Roy Littlefield is president of the Maryland-based Tire Industry Association, which has also fought the tariffs. He says they would be of little help, because if tire companies can't source low-cost products from China, they'll just get more from Brazil or India instead.

Mr. ROY LITTLEFIELD (President, Tire Industry Association): Now, we're very sympathetic to the concerns of the union. I just think that in this particular issue, it wouldn't bring back any union jobs, unfortunately.

KUHN: Supporters of the tire tariffs say that China gives its exporters an unfair advantage through subsidies and an artificially low currency, and so the U.S. must level the playing field for its companies. Russell Moses, Dean of the Beijing Center for Chinese Studies, says that China's leaders are mainly thinking about domestic political considerations.

Dr. RUSSELL MOSES (Dean, Beijing Center for Chinese Studies): They're concerned about unemployment here, productivity here, and they're less concerned with the international consequence of the way in which they've structured industry and trading.

KUHN: Many Chinese are aware of President Obama's domestic considerations, as well. They know that the steelworkers union strongly supported President Obama's candidacy, and that he needs their backing for his health care reforms. Robert Kapp, a consultant and former president of the U.S.-China Business Council, notes that President Obama also needs congressional support for pending free trade agreements with South Korea and Colombia.

Mr. ROBERT KAPP (Consultant, Former President of U.S.-China Business Council): What's really at stake here is the president's credibility with the Congress any time he wants to do anything of a pro-trade or positive nature on U.S. trade policy.

KUHN: The mounting trade frictions are to come up when President Obama meets with Chinese President Hu Jintao at the G20 Summit in Pittsburgh later this month and when he makes his first state visit to China in November.

Anthony Kuhn, NPR News, Beijing.

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