Chinese anger over US tariffs

President Barack Obama slapped punitive tariffs on all car and light truck tyres entering the United States from China in a decision that could anger the strategically important Asian powerhouse but placate union supporters important to his health-care push at home.

Obama had until September 17 to accept, reject or modify a US International Trade Commission ruling that a rising tide of Chinese tyres into the US hurts American producers. The powerful United Steelworkers Union blames the increase for the loss of thousands of American jobs.

The federal trade panel recommended a 55 per cent tariff in the first year, decreasing 10 per cent in each of the next two years. Obama settled on an extra 35 per cent in the first year, reducing by 5 per cent for two years. Beijing yesterday sharply condemned the US move: "China strongly opposes this serious act of trade protectionism by the US.

"This act not only violates the rules of the World Trade Organisation but also violates the relevant commitments made by the US Government at the G-20 financial summit."

China reserves the right to react, Ministry of Commerce spokesman Yao Jian said.

The Chinese Government will continue to adopt necessary measures to support its tyre industry to deal with the negative impact caused by the case, the statement said. China also reserves the right to bring the tariff case to the World Trade Organisation.

By taking "this unprecedented action, the Obama Administration is now at odds with its own statements about refraining from increasing tariffs above current levels," said Vic DeIorio, executive vice-president, GITI Tire (US), which is the largest manufacturer of tyres in China.

The decision comes as US officials are working with the Chinese and other nations to plan an economic summit of the Group of 20 leading rich and developing nations in Pittsburgh, to be held on September 24-25.

China will be a major presence at the meeting, and the United States will be eager to show it supports free trade.