AAM and USW say Chinese tariff program a success

Jan. 1, 2020
Manufacturing (AAM) has issued a report, saying that the tariffs, imposed one year ago by President Barack Obama, on imported tires from China are achieving a positive effect on U.S. tire manufacturers and their workforces.
The Alliance for American Manufacturing (AAM) has issued a report, saying that the tariffs, imposed one year ago by President Barack Obama, on imported tires from China are achieving a positive effect on U.S. tire manufacturers and their workforces.

"The relief provided by President Obama is fulfilling a promise that permitted China's entry into the World Trade Organization – and that promise was American workers and companies would not be harmed by non-market economy distortions in China," says USW International President Leo W. Gerard.

"With relief in place, American workers are beginning to see jobs return to their communities. We must maintain that momentum and allow the tariffs to stay in effect for the full three years," Gerard urges. "To do otherwise would be to break the repeated promise to American workers and companies that they would not be unfairly harmed."

The USW in 2009 sought an investigation into an unprecedented surge of Chinese tires under Section 421 of the Trade Act of 1974, which was designed to give the domestic industry and its workers breathing room from surging imports, he says.

"Section 421 of the trade law is doing what it is intended to do," Gerard adds. "As AAM's report clearly defines, it has reversed a massive decline in domestic production and provided much needed relief to workers, their employers and communities from a flood of Chinese tires."

 

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The Trade Act provision was an important commitment made by the Chinese to permit its entry into the World Trade Organization (WTO). It was designed to facilitate the mutually beneficial growth in trade by reducing the adverse effects of distortions inherent in China's non-market economy, according to Gerard.

"Widely recognized market distortions in the state-controlled Chinese economy include exchange rate management, massive government subsidies and help from state banks. In addition, China's industrial policies and practices regarding export requirements for investors, technology transfers and non-tariff barriers to trade are inconsistent with WTO rules," he says.

"When the International Trade Commission (ITC) examined the surge in tire imports from China, it discovered material injury to the domestic industry through continuous declines in U.S. producers' domestic capacity, production, shipments and employment from 2004 to 2008, a period of general economic growth," Gerard notes.

Domestic capacity declined from 226.8 million tires to 186.4 million tires during the four-year period while actual production dropped from 218.4 million tires to 160.3 million tires, he says. As capacity utilization fell from 96.3 percent to 86 percent, the number of production workers substantially declined as did their hours worked and wages.

"There is no doubt that the relief authorized by the President has reversed the massive decline in domestic production," says USW International Vice President Tom Conway, who heads labor negotiations with Goodyear.

 

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"Goodyear plants producing 421 subject tires hired 130 new workers in 2010 and are working an average of 20 percent overtime. Cooper Tire in Texarkana, Ark., has 250 new hourly hires. The plant is running seven days a week and production is up around 20 percent," he reports.

"The impact at Michelin plants manufacturing covered tires under BFGoodrich and Uniroyal brands is similar. Operations now run seven days a week; overtime is up to 15 percent, and 115 new production workers have been hired since the start of 2010," according to Conway.

"At Cooper Tire & Rubber in Findlay, Ohio, 100 new hourly employees have been hired since the relief went into effect; operations have returned to a seven-day work schedule; and production has increased 20 percent."

Since the 2009 recession, tire production by U.S. producers has increased significantly. Consumption has also increased as the price discrepancy between American and Chinese produced tires diminished, Conway continues.

"China has not been harmed. There has been robust demand for cars and trucks within China, and many of the Chinese tire makers turned their focus to their own domestic market."

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