The U.S. Commerce Department Tuesday set preliminary countervailing duties (CVD) on imports of some 119.2 million dollar drill pipe from China, a move might escalate trade disputes between the two countries.

The department said in a statement that it "preliminary determined that Chinese exporters of drill pipe have received countervailable subsidies of 15.72 percent."

As a result of this preliminary determination, Commerce will instruct U.S. Customs and Border Protection to collect a cash deposit or bond based on these preliminary rates.

In 2009, imports of drill pipe from China were valued at an estimated 119.2 million dollars, according to the Commerce Department.

The department said that it is currently scheduled to make its final determination in August 2010.

If Commerce makes an affirmative final determination, and the U. S. International Trade Commission makes an affirmative final determination that imports of drill pipe from China materially injures, or threaten material injury to, the domestic industry, Commerce will issue an countervailing duty order.

The protectionist moves by the Obama administration will ultimately hurt the U.S.-China trade relations, which are becoming more and more important due to the global financial crisis, economists warned.

Chinese Minister of Commerce Chen Deming recently called on world governments to remain alert to trade protectionism for the sake of a global recovery.

"There is still uncertainties and tough way ahead. As the world is going through an economic recovery, countries across the world need to make concerted efforts to stand against protectionism and support liberalization of trade and investment," Chen said.