Obama Faces Sept. 17 Deadline for Tariffs on Small Vehicle Tires Imported From China

This story appears in the Sept. 14 print edition of Transport Topics.

President Obama must decide by Sept. 17 whether to accept the recommendation of the U.S. International Trade Commission to impose tariffs on passenger and light-truck tires made in China, the second-largest U.S. trading partner.

The potential tariffs would not apply to heavy-duty commercial tires, although a spokesman for the union that brought the complaint against light-vehicle tires did not rule out the possibility examining larger Chinese tires.

“We have received no complaints about unfair practices regarding the import of Chinese commercial tires, and without a complaint, we do not undertake an investigation,” ITC spokeswoman Peg O’Laughlin told Transport Topics.

The United Steelworkers union brought the original complaint against Chinese tire manufacturers under a provision of the World Trade Organization, which China entered in 2001, USW spokesman Gary Hubbard told TT.

Hubbard said that the USW has never studied whether Chinese commercial tires may violate WTO rules, though he did not rule out possible future action.

The ITC ruled against Chinese importers on Sept. 2, and, under the applicable law, the president must decide whether to impose the tariffs the ITC recommended within 15 days, O’Laughlin said.

“Imports of Chinese tires of this type tripled between 2004 and 2008,” USW’s Hubbard told TT.

Referring to World Trade Organization procedures, he said, “We brought the case under a WTO provision that a sudden surge of imports can damage U.S. industry and cost jobs. There is no doubt that a tripling of volume in just four years constitutes an unjustified surge.”

USW put the annual value of Chinese imports at $1.7 billion.

Hubbard said that U.S. companies, not unions, usually brought such trade cases, especially because of their expense, which he put at “millions and millions of dollars.”

“There has to be blood in the streets caused by some country’s export action for the USW to file such a complaint,” he said. “That’s what Chinese tire imports have done, and we are calling on President Obama to approve the ITC recommendation for tariffs.”

Hubbard said that former President Bush had rejected ITC recommendations to impose tariffs on other Chinese imports four separate times.

“But President Obama promised in his campaign to protect American workers from unfair trade practices, so that we believe he should follow what the ITC recommended,” Hubbard said.

The publication Modern Tire Dealer, in its latest data on medium-duty and heavy-duty truck tire sales, showed that China Manufacturers Alliance, which imports tires under the Double Coin brand, had just 1.5% of the U.S. market.

Patrick Rosenstiel, executive director of the Trade Alliance to Promote Prosperity — which formed recently to oppose the tariffs on Chinese tires — said Obama could trigger a trade war if he approves the ITC decision.

Rosenstiel declined to identify the financial supporters of the Trade Alliance, based in Minneapolis, but he said the alliance, which also has a Washington office, has just applied to the IRS as a nonprofit organization.

“An affirmative decision runs the risk of starting a trade war between the U.S. and China, and I don’t know how U.S. industry could survive,” Rosenstiel told TT. “China could retaliate by saying we couldn’t sell Buicks in China, which is the largest brand in that country. What would that do to General Motors?”

The ITC proposal, he said, calls for an initial tariff of 55% on Chinese passenger tires.

“The Chinese can then put a 55% tariff on American soybeans, and 55% of American soybean exports go to China, which is worth far more than Chinese tire imports,” Rosenstiel said.

The Trade Alliance posted a petition on its Web site calling on the president to reject tire tariffs, and Rosenstiel said the petition garnered 200,000 signatures in its first two days.

China and the United States traded more than $400 billion last year, making China the second-largest U.S. trading partner after Canada. China is also the largest foreign holder of U.S. debt, with $776.4 billion, Bloomberg News reported.