Nov. 6 (Bloomberg) -- China protested U.S. duties on steel pipes and announced the start of an anti-dumping probe into American carmakers as trade tensions escalate ahead of President Barack Obama’s first visit to the nation this month.

The levies of as much as 99 percent on $3.2 billion of Chinese exports are “discriminatory,” the Commerce Ministry in Beijing said on its Web site today. The penalties were announced in a preliminary decision by the U.S. Commerce Department yesterday.

The disputes may test relations between the U.S. and the biggest foreign buyer of its debt ahead of Obama’s visit on Nov. 16. The two nations, with $409 billion of trade between them, have swapped complaints about steel, poultry and tires as the worst economic crisis since the Great Depression spurred countries to protect jobs.

“Falling demand, caused by the financial crisis, is the ultimate reason for the problems in the U.S. steel industry,” Yao Jian, a spokesman at the Chinese ministry, said in the statement. “The U.S. should take this into consideration in its further investigations and make a fair and reasonable final ruling.”

The Asian nation is the second-biggest trading partner for the U.S. after Canada. China plans to investigate whether some U.S.-made sports utility vehicles and cars sold in the Asian nation benefited unfairly from American government help, according to a government statement today.

Rising Tensions

General Motors Co., the largest U.S. automaker, is majority owned by the government after a bankruptcy reorganization. The carmaker more than doubled September sales in China from a year ago.

Trade tensions are on the rise after Obama imposed tariffs on Chinese tires in September and China responded with a complaint to the World Trade Organization. The U.S. and the European Union this week asked the WTO to end Chinese restrictions on exports of nine commodities.

Duties of 36.5 percent will be imposed for the 37 largest exporters of pipes used in the oil and gas industry, the U.S. said in a preliminary decision yesterday, after complaints about dumping were received from companies led by U.S. Steel Corp. The tariffs will be on top of separate duties announced in September, averaging 21 percent to counter alleged Chinese subsidies.

“The anti-dumping ruling is unfair to Chinese producers who sold the pipes in the U.S. at a 20 percent premium to our domestic prices,” said Li Liancang, an export manager at state- owned Tianjin Pipe Group Co. “Chinese pipe exports to the U.S. have almost stopped since the preliminary ruling in September.”

Chinese steel exports to the U.S. plunged 73 percent in the first eight months from a year ago, the China Iron & Steel Association said last month.

Falling Demand

The value of Chinese steel-pipe exports under investigation reached $3.2 billion last year, or 46 percent of the country’s total steel exports to the U.S., the Chinese ministry said. It “strongly opposes” the duties, the statement said.

“The U.S. has had a lot of trade remedy measures this year against China,” said Hu Yanping, a Beijing-based analyst with Umetal, a steel research company. “China has bought huge U.S. debts. Why is the U.S. always targeting China?”

The U.S. has carried out 13 investigations against Chinese products this year for alleged dumping and illegal subsidies, the Asian nation’s commerce ministry said in the statement.

“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,” Leo Gerard, president of the United Steelworkers, said in a statement.

The pipe case, the largest so-called countervailing and anti-dumping duty complaint filed against Chinese-made products, was brought by the union, U.S. Steel, U.S. operations of Evraz Group SA, and Pennsylvania-based Wheatland Tube Co.

Production Plunges

The two top Chinese exporters of the pipe to the U.S. received their own specific rates. Jiangsu Changbao Steel Tube Co. won’t face any dumping duties, while Tianjin Pipe was assessed a 36.5 percent duty. Changbao received a 24 percent countervailing duty in September.

“Capacity utilization at plants has tumbled to below 50 percent” for makers of the oil pipes, Tianjin’s Li said, citing data from the Chinese steel association. “We have to shift to making other products but demand for them is much smaller.”

--Helen Yuan, Mark Drajem and Belinda Cao. Editors: Tan Hwee Ann, Ang Bee Lin.

To contact the Bloomberg staff on this story: Mark Drajem in Washington at mdrajem@bloomberg.net; Helen Yuan in Shanghai at hyuan@bloomberg.net

Last Updated: November 6, 2009 05:10 EST