Trade war watch: China threatens 30 percent tariff on U.S. nylon

Nylon seems like an innocuous enough product, but the material used to make goods like rope and pantyhose appears to have pushed the United States and China closer to a full-blown trade war.

Accusing U.S. nylon manufacturers of dumping Nylon 6 on the Chinese market, China's Ministry of Commerce has made a preliminary decision to impose a steep 30 percent tariff on the material -- also known as polycaprolactam -- the agency's website says.

The People's Republic said "Nylon 6 is widely used in the manufacture of hosiery, knitted garments, threads, ropes, filaments, nets and tire cords."

The U.S. is not the only country getting hit with a tariff on this special type of nylon. Smaller ones will be imposed on the European Union, Russia and Taiwan, the agency says. But as the U.S. and China have already had their share of recent trade dust-ups, this latest action suggests the two countries may be headed for an out-and-out trade war. The Obama Administration has already imposed a tariff on Chinese rubber imports. And China is looking into whether American chicken suppliers are dumping chickens into its markets.

It is not clear what the tariffs are costing businesses in the U.S. and China. What is clear is that new tariffs and investigations are starting every few weeks.

The conflicts are likely to escalate as China's economy continues to grow much faster than America's. Part of the promises made by Barack Obama during his campaign included looking after the interests of labor and the American workforce. To make good on that, he may have to become increasingly aggressive about keeping inexpensive goods from China out of U.S. markets.

The Chinese are bound to retaliate, although they will never say that. But, if the tariffs continue to mount on both sides, it will become evident that rubber and nylon are not just rubber and nylon. They are part of broader policy decisions to protect national economic interests

Douglas A. McIntyre is an editor at 24/7 Wall St.

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