Calling the decision to impose tariffs on Chinese tires “politically motivated,” the Tire Industry Association is urging President Barack Obama to reverse his stand on the issue.
The tariffs will take effect Sept. 26. Under the U.S. International Trade Commission’s (ITC) 421 Safeguard provisions, Obama can revisit the ruling in six months and modify, remove or leave the tariffs in place.
“TIA believes this was a politically motivated decision that will end up costing more jobs than it saves,” says Roy Littlefield, the association’s executive vice president.
“These tariffs will not bring back the jobs that the union claims have been lost; it will not create any new tire manufacturing jobs, and it will most likely result in the loss of thousands of retail tire industry jobs here in the U.S., affecting everyone from the shop that services your tire to the tire wholesalers – many of whom are small businesspeople struggling to stay afloat in this economy,” he asserts, adding that “we can ill afford to be losing more U.S. jobs.”
Littlefield goes on to point out that “the tire manufacturers made the decision years ago to shift production of these lower-cost tires out of the U.S. All this action will do is force the tire manufacturers to shift production of these lower-cost tires to other countries, such as Brazil and India. The bottom line here is that despite what the union and the President believes, these jobs are not coming back, and now we can expect more job losses here in our already struggling economy.”
“It’s our union’s responsibility to defend our members and to do it in a way that is within the law, and that’s what we have done,” counters Leo W. Gerard, president of the International United Steelworkers (USW). “We’re not against trade. We want a level playing field.”
Gerard says “President Obama rightly rejected groundless retaliation threats and imposed relief based on the merits of this case. We are within our complete, total 100 percent right under the safeguard to ask for the remedy that we did.”
The ITC upheld the union’s complaint after an extensive review. “For far too long, workers across this country have been victimized by bad trade policies and government inaction,” Gerard continues. “President Obama has made clear that he will enforce America’s trade laws and stand by American workers.”
Gerard is advocating that the U.S. “should redesign its trade policy to provide a better balance for the needs of domestic workers and industries that employ them. We need a trade policy that works for American workers as well as multinational corporations and Wall Street.”
When the USW filed its trade case, it asked for quotas on the imported tires. The ITC agreed with the union’s position on surging exports from China, but decided that relief in the form of tariffs would be the best response.
Opponents of the tariffs cite concerns that a trade war could break out between the U.S. and China, and American poultry producers are squawking that such a squabble is already unfolding as the Chinese government has opened an anti-dumping investigation regarding chickens.
“China’s announcement is obviously in direct retaliation for the U.S. action in putting tariffs on tires made in China,” says Richard L. Lobb, spokesman for the National Chicken Council. “Charges of dumping of poultry products are completely unjustified. Our companies engage in normal trade with China, not dumping.” The dispute is likely to be addressed by the World Trade Organization (WTO).
China has officially objected to the tire tariffs in a filing with the WTO.
Meanwhile, Littlefield at the TIA has prepared a Q&A relating to the U.S. tire industry:
What was decided?
President Obama made a decision to raise tariffs for three years on passenger and light truck tires imported from China, most of which are in the lower-cost segment. The tariffs are scheduled as follows: 35 percent in the first year, 30 percent in the second and 25 percent in the third.
How many tires are shipped from China to the U.S.?
Unfortunately, TIA does not have any information on this. However, the Washington Post recently printed some figures: From $453 million in 2004 to $1.7 billion in 2008. That boosted China’s share of the U.S. market from 5 percent to 17 percent.
What is the next step?
There is no “appeal” process in the WTO. China will be pursuing a WTO violation, and the process could last longer than the tariffs themselves. The tariffs will be imposed on Sept. 26 regardless.
Can the President reconsider his decision?
Under the 421 Safeguard provisions of the WTO, the President can revisit the decision after six months and go back to the ITC and modify, remove or leave in place the decision.
Why is TIA opposed to the tariffs?
This tariff will not be a “job saver;” rather, when you take into account the thousands of tire industry jobs – from the technician who services tires, to the tire shop owner (many of whom are small businesspeople) to the tire wholesalers, we predict it will be a “job killer.” A study by economics professor Thomas J. Prusa of Rutgers University found that American workers in the tire distribution and installation sectors “have every reason to be concerned about their future. The punitive tariff on Chinese tires would lead to a loss of at least 25,000 U. S. jobs.”
How does this affect the consumer?
This tariff will price these tires out of reach of many consumers, and will lead to a tightening in the remaining supply of lower-cost tires. Also, given that the lower-cost tires imported from China help those most vulnerable in this current economy – working-class citizens – we are deeply concerned that many consumers may delay or even defer replacing their tires when necessary, thus creating a potential safety hazard on America’s roads.
For more information, visit www.tireindustry.org and www.usw.org.
