Although it was announced on September 11, the US government’s decision to impose duties of 25-35% on imports of Chinese car tires did not come out of nowhere. Trade tensions between the two countries had been increasing for months, with the US International Trade Commission recommending in June that the US impose duties of up to 55% on Chinese tires.
Neither were the trade tensions confined to tires. The US Department of Commerce slapped duties of up to 31% on imports from China of steel pipes such as those used in oil and gas wells. The tire and steel pipe duties are considered steep enough to block most Chinese exports of those products to the US.
China responded by saying it would launch an anti-dumping probe into US chicken imports, and demanded the US meet for trade talks at the WTO. Fears of a backlash led trade bodies to caution against further escalation.
"We urge both countries not to allow this decision to impact the larger commercial relationship on which both countries are relying to create jobs and drive economic growth," the American Chamber of Commerce in Shanghai said in a statement.
The disagreement followed China’s decision to abolish tariffs on imports of auto parts, in keeping with a WTO ruling. The European Chamber of Commerce in China, which in its annual position paper said barriers to entry made China a "less and less appealing" market for European companies, welcomed the development.
Encouragingly, China’s angry rhetoric on the US duties has not yet shown signs of evolving into full-fledged protectionism. While protectionist sentiment is rising, wrote Citi China Chief Economist Shen Minggao in a recent note, protectionism remains a threat rather than a reality.
"[China’s reaction] does not mean that China may take further steps to confront the US, as long as trade disputes remain trade-specific and limited to small segments of trade," he wrote.