President Barak Obama during a visit to a GM plant - along with South Korean President Lee Myung-bak.
President Barack Obama is expected to announce that the White House will file a new trade complaint accusing China of dumping cars and car parts into the U.S. market.
The President is expected to detail the new complaint, which will be filed with the World Trade Organization, during a campaign stop in Ohio later today. The news could shore up his standings in Ohio, a state heavily dependent upon automotive manufacturing. Obama has come under fire from GOP challenger Mitt Romney for not taking a stronger stand on Chinese trade and intellectual property infractions.
China actually beat the U.S. to the punch, however, filing its own charges with the WTO. on Monday, alleging that the U.S. has unfairly enacted duties on 30 types of subsidized goods imported from the Asian giant ranging from kitchen appliances to tires to wind towers.
The two nations have become locked into an increasingly bitter trade battle. And the stakes are increasing as the U.S. heads into the final weeks of the presidential election campaign while China faces worrying signs of an economic slowdown.
“The key principle at stake is that China must play by the rules of the global trading system,” a White House official told the Associated Press. “When it does not, the Obama administration will take action to ensure that American businesses and workers are competing on a level playing field.”
Imports of Chinese-made auto parts now amount to billions of dollars annually. At this point, only a handful of Chinese-made automobiles are being imported into the United States, primarily those sold by the California battery car start-up Coda. But several Chinese makers, including BYD, have promised to start shipping vehicles to the U.S. over the next several years.
The White House complains that China has improperly levied over $3 billion in duties on U.S. automotive exports. That move was enacted earlier this year following a U.S. trade move to place duties on Chinese-made tires.
The Chinese auto import tariffs vary widely by manufacturers but are stiffest for products built by Detroit’s Big Three. The Cadillac CTS and Buick Enclave, for example, are subject to 22% duties, the Jeep Wrangler and Grand Cherokee models 15%. The American-made Acura TL sedan, on the other hand, faces only a 4.1% mark-up.
Trade problems between the U.S. and China have been simmering for a number of years and American manufacturers have been demanding more government support. It’s not only subsidized Chinese exports that have raised concerns but the ongoing theft of intellectual property. Ford Motor Co. recently achieved a rare victory beating back a Chinese competitor that had created a virtual clone of the American manufacturer’s familiar F-Series pickups.
The Romney campaign has been struggling to portray the White House as weak on foreign policy, especially trade, and the Obama Administration clearly wants to counter that image during its campaign tour through Ohio, a manufacturing swing state that could prove critical during the November election.
But China appears increasingly willing to fight back, especially at a time when that nation’s command economy is showing some unexpected signs of weakness. The Chinese leadership is also worried about appearing weak as it prepares to undergo a scheduled 10-year transition of power.