The United States launched a trade case against China on Monday claiming that the Chinese government has unfairly subsidized its auto industry.
The complaint at the World Trade Organization said that between 2009 and 2011 China provided at least $1 billion to domestic auto and auto parts manufacturers.
According to the Wall Street Journal, China struck back immediately, filing complaints against US tariffs on a number of Chinese exports, including tires, steel, magnets and chemicals.
The complaint comes the same day President Barack Obama is to address supporters in Ohio, a battleground state that is key to the US auto industry.
"Those subsidies directly harm working men and women on the assembly line in Ohio and Michigan and across the Midwest," said the advance text of the speech Obama will deliver in Ohio, reported Reuters.
"It's not right; it's against the rules; and we will not let it stand."
The New York Times reported that places like Ohio have suffered greatly from job losses in the auto parts sector in the last decade.
The hollowing out of the auto parts industry in the US has coincided with the rise of Chinese manufacturers that produce the parts more cheaply.
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The Times reported that while the US auto parts industry has dropped by one half over the last decade, the Chinese equivalent has grown sevenfold.
The trade move comes after pressure from US automakers who have said that the industry is awash in cheap Chinese auto parts that are harming US competitiveness.
Republican presidential nominee Mitt Romney has repeatedly accused the Obama administration of not doing enough for US industries in the face of unfair Chinese trade practices, said CNN.
The US has previously filed a complaint regarding duties on US cars in China, which is still pending.
For its part, China filed complaints for 30 different products that it said have been slapped with unfair tariffs in the US.
The WTO is unlikely to rule on the two cases before the US election in November, Reuters reported.