BONZER WOLF™

A full-blown trade row erupted on Sunday night between the US and China after Beijing accused Washington of “rampant protectionism” for imposing heavy duties on imported Chinese tires and threatened action against imports of US poultry and vehicles.

Trade relations between two of the world’s biggest economies deteriorated after Barack Obama signed an order late on Friday to impose a new duty of 35 per cent on Chinese tyre imports on top of an existing 4 per cent tariff.

In his first big test on world trade since taking office in January, Mr Obama sided with America’s trade unions, which have complained that a “surge” in imports of Chinese-made tyres had caused 7,000 job losses among US factory workers.

Obama’s decision is a clear affirmation of the power of unions in shaping trade policy. It appears that Obama is desperate to shore-up support from unions and the left of the Democratic Party for health-care reform—his most pressing domestic concern—and is prepared to risk repercussions on trade.

Beijing issued a statement Saturday sharply condemning the U.S. move.

"China strongly opposes this serious act of trade protectionism by the U.S.," the statement on the Ministry of Commerce Web site said. "This act not only violates the rules of the World Trade Organization but also violates the relevant commitments made by the U.S. government at the G-20 financial summit."

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