WASHINGTON, D.C. — After reviewing recommendations from the United States Trade Representative (USTR), President Obama on Sept. 11 signed an agreement to apply an increased duty to all imports of passenger vehicle and light truck tires from China for a period of three years in order to remedy a market disruption caused by a surge in tire imports.
As part of its accession to the World Trade Organization (WTO), China agreed to a special safeguard mechanism that would allow its trading partners to implement remedies in response to import surges and under other circumstances. The President decided to remedy the clear disruption to the U.S. tire industry based on the facts and the law in this case.
The additional duty to passenger vehicle and light truck tires – complementing the existing 4 percent duty – will be set at 35 percent for the first year, 30 percent the second year and 25 percent the third year.
Commenting on the move, the United Steelworkers (USW) yesterday called President Obama’s decision to impose tariffs on Chinese consumer tires "simply a matter of enforcing existing trade laws."
"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," USW International President Leo Gerard said. "We’re not against trade. We want a level playing field. President Obama rightly rejected groundless retaliation threats and imposed relief based on the merits of this case."
Others in the tire industry were not so understanding. The Tire Industry Association (TIA) said it is “deeply disappointed” in the Obama Administration’s decision to place added tariffs on imported China-made passenger tires.
The association, which made no prior public statements regarding the situation, issued a statement yesterday calling the decision “politically motivated.”
TIA also pointed to a study by economics professor Thomas Prusa of Rutgers University that said a “punitive tariff on Chinese tires would lead to a loss of at least 25,000 U.S. jobs" among tire distributors and retail tire techs.
According to a report from BusinessWeek, Beijing strongly protested the 35 percent tariff imposed by Obama and said it would investigate alleged dumping of U.S. automobile parts and chicken products in China and is considering filing a trade complaint with the WTO.
News of Obama’s decision also sent Chinese stocks plunging on Monday, according to Daily Finance. The news was linked to a dramatic drop in the Chinese tire segment: Double Coin Holdings Ltd. dropped 10 percent; Aeolus Tyre Co. dropped 3.3 percent, Guizhou Tyre Co. Ltd. went down 6.7 percent and Giti Tire Corp. fell 4.9 percent.
