Tit for Tat Trade Dispute Erupts Between U.S., China

President Barack Obama’s imposition of a 35 percent tariff on Chinese tires has met with a swift response from the Chinese – who promised to restrict U.S. exports of chicken meat and U.S. automotive products to their market.

Are these the opening salvos in a damaging trade war? That’s unlikely, but they do point to how touchy countries are over issues of protectionism in a weak world economy.

The Obama administration, citing a jump in Chinese tire imports it would impose a tariff of up to 35 percent on Chinese tires, effectively cutting off 17 percent of the tires sold in the U.S., the Wall Street Journal reported. The announcement made Friday was a sign Obama planned to live up to promises made to labor unions that it would get tougher on trade law enforcement, especially as they apply to China, the New York Times reported.

It also comes at a time, the Journal points out, that Obama will be seeking all the labor support he can get to pass U.S. healthcare reform. That’s something China’s Xinhua News Agency jumped on in its criticism of the U.S. tariffs. “It is a huge regret that crucial China-U.S. trade relations are once again disrupted by [domestic] political disputes," the Journal quotes the agency as saying.

It didn’t take long for China to respond. After a weekend of what the Times called “nationalist vitriol,” on Chinese web sites, including calls for China to dump its immense holdings of U.S. debt, China’s commerce ministry Sunday came out with a plan to investigate whether the U.S. was dumping subsidized chicken meat and car parts on its market.

The Journal reports that experts don’t see deteriorating relations between the countries as a result of the back-and –forth.

But some say the more overt moves either government makes to restrict trade, the more likely they are to get a similar response from the other side.

James Zimmerman, a Beijing-based American lawyer, told the Journal, "overt political posturing welcomes a like response. We can expect the tit-for-tat political posturing going forward and in a way that may be damaging to U.S. commercial interests."