According to the US trade representative, Ron Kirk the US has filed a complaint with the World Trade Organisation (WTO) regarding China's restrictions on the export of key industrial raw materials.
The US has also been joined by the EU in the case as China has refused to cut export tariffs or raise quotas.
The US and EU contend that the export restrictions imposed by China provide an unfair advantage to Chinese companies which distorts world competition thus violating WTO rules.
The petition, which is the first by the Obama administration against China, cites taxes on about 20 different metals and chemicals that serve to limit exports giving an unfair advantage to Chinese manufacturers.
Meanwhile in a move that underscores the increasingly apparent shift in the Chinese stand on protectionism the Chinese government has issued a strong ''buy Chinese'' directive to government departments that are disbursing part of its 5 trillion yuan stimulus package.
The US steel sector has also joined the debate saying that the Chinese government's increasing subsidies are giving Chinese mills a competitive advantage.
"We believe China must comply with WTO rules," US Steel chairman and chief executive John Surma said this week. "We believe subsidisation seriously undermines the global steel industry."