China hits back at US tariffs as trade spat escalates

China slammed new US tariffs on Chinese steel goods Friday and launched its own probe into US car imports as a tit-for-tat trade tussle escalated just a week before a visit by US President Barack Obama.

China's commerce ministry harshly criticised as "protectionist" a US announcement Thursday that Washington had imposed anti-dumping tariffs of up to 99 percent on imports of some Chinese steel products used in the oil industry.

China "firmly opposes the abuse of protectionism and will take measures to seriously protect the interests of the domestic industry," the ministry said in a statement on its website.

Vice Commerce Minister Yi Xiaozhun later told reporters China was "gravely concerned" by the move, adding that the import value of the affected products, known as oil country tubular goods (OCTG), was 3.2 billion dollars in 2008.

The action is "the biggest so far" taken against China by another country, Yi said, adding: "So you can see that this is a really big case."

Dumping occurs when a foreign company sells a product in another market at less than normal value.

Simmering trade tensions between Washington and Beijing boiled over in September when the Obama administration announced it would slap duties on Chinese-made tyres to protect local US producers.

Since then, the world's number one and three economies have traded a series of accusations of unfair trade practices.

On Friday, China said it had launched a probe into alleged dumping and unfair subsidies involving imported US "sedans and off-road vehicles with an engine size of 2.0 litres or above."

China said in September that its domestic auto industry had requested that the ministry look into the matter, but the government had not given specifics about the products in question until now.

China "will make an impartial and reasonable ruling on this case based on the law and facts to maintain fair trade," a commerce ministry statement said.

Obama -- who will be in China from November 15-18 -- said in July that the US-China relationship would "shape the 21st century".

In a press briefing in Beijing on Friday on Obama's visit, Vice Foreign Minister He Yafei was upbeat about US-China ties, saying the trip would mark a "new historical starting point" in relations.

But the US action -- and China's sharp response -- threatened to poison the atmosphere ahead of Obama's arrival.

The two sides, the world's two biggest sources of the greenhouse gases blamed for climate change, are already at odds over how to apportion responsibility for reducing such emissions.

The United States is pressing China for aggressive action to limit greenhouse gas emissions, while Beijing insists that developed countries, such as the United States, should take the lead.

The United Steelworkers (USW) union in the United States hailed the new US tariffs as "an overdue message for thousands of American laid off workers that trade laws are being enforced."

USW president Leo Gerard said the anti-dumping measures were "promising" for US producers reeling after nearly half of the industry's 6,000-strong workforce had lost their jobs.

"China's government and exporters are being told we are fed up with their cheating on our fair trade laws and penalties for these transgressions are long overdue," he said.

But China's commerce ministry said the US duties were a bid to protect US makers of steel goods during the global downturn.

"The ultimate reason for problems in the relevant US industry was the slump in consumption due to the financial crisis," it said.