U.S. tire duties fuel trade tension with China

BEIJING (Reuters) - A U.S. decision to impose special duties on Chinese tires could open the door to a host of trade complaints against Chinese products, creating tensions as Western nations seek Beijing's support at a G20 meeting.

China responded swiftly to U.S. President Barack Obama's announcement Friday of safeguard duties on tire imports from China, saying on Monday it would request World Trade Organization consultations with the U.S. over the duties.

It also announced its own anti-dumping investigations of chicken products from the United States, a trade worth $800 million a year, as well as U.S. automotive exports.

Looming in the United States are complaints about products ranging from electric blankets to a steelmaking ingredient, while Chinese and European trade negotiators are gearing up for a fight over shoes.

Obama, in a speech on Wall Street, said he was committed to expanding world trade and denied protectionist intent.

"When, as happened this weekend, we invoke provisions of existing agreements, we do so not to be provocative or to promote self-defeating protectionism," he said.

"We do so because enforcing trade agreements is part and parcel of maintaining an open and free trading system."

U.S. Agriculture Secretary Tom Vilsack said the Obama administration will strongly object to any attempt by China to retaliate against chicken exports.

"There is no reason why another country should try to even the scale, if you will, by focusing on agricultural products," Vilsack told a National Farmers Union conference.

Stocks on Wall Street slipped shortly after the opening bell on Monday in part over concerns about the trade dispute. But the row helped lift shares of U.S. tiremakers, with Goodyear Tire & Rubber Co shares up 5.3 percent to $18.18 and Cooper Tire & Rubber Co adding 8.8 percent to $15.85.

NO FULL-SCALE TRADE WAR

While the intensified sparring between two of the world's biggest economies could trigger a bout of nerves in financial markets, it is unlikely to spiral into a full-scale trade war.

The countries have too much at stake and need each other too much when it comes to problems like North Korea to let the dispute spin out of control, said Jia Qingguo, expert on China-U.S. relations at Peking University.

"Both sides will work hard to limit the fallout from this to within certain parameters and not let it affect the broader state of relations and cooperation," he said.

On Monday, Chinese state media denounced Obama's decision, which launches additional duties of 35 percent on Chinese-made tires from Sept. 26, a day after the G20 summit of the world's biggest nations ends in Pittsburgh.

"Even though the duties the U.S. imposed were lower than those recommended by U.S. International Trade Commission, it is still a serious case of protectionism, which China resolutely opposes," said China's vice minister of commerce, Zhong Shan.