August 26, 2009

China may retaliate over tire issue

China would retaliate if U.S. President Barack Obama imposes tariffs on Chinese-made tires, China Daily reported Wednesday quoting experts.

The U.S. Trade Representative is expected to submit the final proposal on the $2.2 billion Chinese tire import issue in about a week and President Obama will have two more weeks after that to make his decision.

The administration is under pressure as the sharp increase in Chinese tire imports are seen as threatening the U.S. tire market.

China Daily, quoting the experts, said the outcome is uncertain although Chinese tires have not disrupted the U.S. market. The Chinese government also has been working for three months to convince the U.S. government not to impose the tariff.

China's government should not tolerate unreasonable and unfair behavior by the U.S. and must fight back firmly and quickly, He Weiwen, a council member of the China Society for American Economy Studies, told the newspaper.

If President Obama approves the final proposal, duties up to 55 percent could be imposed on Chinese-made tires. The report said this could lead to a loss of 100,000 jobs in the Chinese manufacturing sectors.

Chinese retaliation could include limits on automobile imports from the United States. The report said in the first half of this year, China imported $1.02 billion of U.S. automobiles, up 9.1 percent from a year earlier, the report said.