The World Trade Organization has ruled that Washington acted within its rights when it raised import taxes on Chinese tires to reduce their flow into the United States.
The trade panel dismissed China's complaint that the higher tariffs breached WTO rules.
The office of the U.S. Trade Representative in Washington called the ruling released Monday "a major victory for the United States and particularly for American workers and businesses."
The dispute focused on a three-year tariff approved in September 2009 by President Barack Obama. U.S. imports of low-grade Chinese tires rose threefold to about 46 million tires between 2004 and 2008.
China can appeal the panel's verdict within 60 days to an appellate hearing panel of the WTO, the Geneva-based organization that oversees the rules of global trade.
Obama had imposed a tariff on imported tires from China. The tariffs started at 35 percent in the first year, which began in September 2009. They then fell to 30 percent in the second year and will drop to 25 percent in the third year. The United Steelworkers Union pushed for the penalty tariffs, saying a surge of tire imports from China had cost 5,000 U.S. tire workers their jobs since 2004.
The union complained after tire imports from China more than tripled from 2004 to 2008, and its market share of tires sold in the U.S. nearly quadrupled in that time.
The White House and members of Congress are under political pressure to slow Chinese imports into the United States.
In addition to union complaints, U.S. manufacturers contend China is keeping its currency, the yuan, undervalued by as much as 40 percent to make Chinese products cheaper in the United States and American goods more expensive in China.
The administration has been pressing the Chinese to move more quickly to allow the yuan to appreciate in value against the dollar. But since Beijing pledged increase currency flexibility in June, the yuan has risen in value by only about 3 percent.
The U.S. House passed legislation in September that would give the government more powers to issue tariffs against products from China and other countries that manipulate their currencies to gain trade advantages.
The Senate has yet to take up the legislation. But Sens. Olympia Snowe, R-Maine, and Sherrod Brown, D-Ohio, said Monday they had filed the text of the House bill as a proposed amendment to a tax agreement currently being debated in the Senate. That measure would extend the Bush-era tax cuts for two years.
Both Snowe and Brown said it was important to U.S. workers that the Senate pass the currency bill before it adjourns for the year.
Treasury Secretary Timothy Geithner, who has been pressing Beijing on the currency issue, was scheduled to hold talks Tuesday with Chinese Vice Premier Wang Qishan. Wang is leading a high-level Chinese delegation that will hold two days of talks on trade with administration officials in Washington beginning Tuesday.