US-China tire spat unlikely to trigger trade warWASHINGTON -- China's complaint Monday over new U.S. tariffs on Chinese tires raised pressure on Washington but isn't likely to incite a full-blown trade war. Each side knows its economy has too much to lose.
The United States, the world's largest economy, represents a huge market for Chinese exports. And China is the largest holder of U.S. government debt at a time when the federal deficit has swollen to record levels because of economic rescue measures.
China quickly took its case to the World Trade Organization after President Barack Obama ordered steep increases in U.S. tariffs on Chinese tires for three years, including by 35 percent in the first year.
For China, barriers on its exports to the U.S. mean job losses at home. Still, private economists say they expect both sides to avoid a conflict that would harm producers in each country.
"The big message from China to the United States is think twice, think three times before repeating this kind of relief for a U.S. industry because if you do this again, we are going to hit you again," said Gary Hufbauer, a trade expert at the Peterson Institute, a Washington think tank.
In a speech Monday in New York, Obama defended his decision to impose the tire tariffs. Chinese imports represented almost 17 percent of the U.S. tire market last year and have been blamed for the loss of thousands of American jobs.
The White House said Obama acted under a provision in the U.S.-Chinese agreement on Beijing's accession to the World Trade Organization that lets Washington slow the rise of Chinese imports to give time to American industry to adjust.
In response, Beijing filed a complaint with the WTO, triggering a 60-day process in which the two sides will try to resolve the dispute through negotiations. If that fails, China can ask for a WTO panel to investigate and rule on the case.