Beijing today launched an inquiry into allegations that American carmakers such as General Motors and Ford dumped government-subsidised cars on to the Chinese market in the latest flare-up of trade tensions between the two huge economies.

The anti-dumping investigation adds sports utility vehicles to a growing list of products embroiled in an acrimonious trade spat that includes chicken and tyres.

China’s deliberately high-profile announcement swiftly followed last night’s decision by Washington to impose hefty tariffs on steel pipes imported from the Chinese manufacturers. The Chinese commerce department described the tariffs as “discriminatory” on its website.

Beijing’s move is seen as a double escalation of the trade row. The targeting of American carmakers – and the prospect of punitive fines -- aims a potentially savage blow at a US industry still wrestling for survival in dreadful domestic and European markets.

With China on the brink of becoming the world’s biggest vehicle market this year, no global carmaker can afford setbacks in the one country that promises serious growth. GM’s September sales this year, at more than 181,000 vehicles, were more than double those of the same period last year.

But significantly, Beijing’s decision to launch the anti-dumping inquiry comes just over a week before of President Barack Obama’s first visit to China – where issues surrounding the $409 billion worth of annual trade between the countries were always expected to be explosive. In the mix is mutual distrust over protectionism and the issues surrounding China’s huge holdings of US debt.

Two months ago, Washington imposed a 35 per cent tariff on Chinese tyres and was met with an immediate Chinese investigation into US dumping of car parts. China says that the Obama administration has launched 13 separate anti-dumping and subsidy inquiries into Chinese products since the beginning of the year.

Beijing’s investigation suggests that GM and Ford were able to undercut competitors by selling sports utility vehicles with government subsidies – a move that may be designed to highlight the fact that America’s biggest carmaker needed a bailout from the state.

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