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ITC Recommends Imposing Tariffs on Chinese Tires

Published 06/30/09 Dustin Ensinger - Print Article
E-mail - editor@economyincisis.org

Yesterday, the U.S. International Trade Commission unanimously voted to recommend that President Barack Obama impose tariffs on Chinese imports for a period of three years to redress the unfair trade practices that Chinese manufacturers have used to severely hurt the U.S. industry.

Earlier this month, the ITC ruled that the import of Chinese tires is adversely affecting the domestic industry, after a complaint was filed by the United Steelworkers Union.

The USW complaint alleged that China, through currency manipulation, illegal subsidies and other illegal trade practices, has damaged the domestic tire industry by dumping vast amounts of low-priced tires into the American market.

According to the USW, from 2004 to 2008, Chinese tire imports increased 215 percent by volume and 295 percent by value. Over that same time, domestic production has fallen 25 percent.

By 2008, Chinese tire manufacturers imported 46 million tires worth approximately $1.7 billion.

That deluge of cheap Chinese imported has resulted in the loss of at least 5,100 jobs in the industry since 2004. In addition, the USW claims that another 3,000 industry jobs are set to be lost by the year’s end as another three plants shutter because they cannot keep up with Chinese competitors.

The USW had suggested that quotas, capping Chinese tire imports at their 2005 levels, are the most appropriate penalty. The ITC, however, decided that a more appropriate penalty would be to impose tariffs for a period of three years on all Chinese tire imports.

The ITC recommended that the tariff be 55 percent in the initial year, 45 percent in the second year and 35 percent in the final year.

The USW seems to be pleased with the ITC’s ruling, saying that the tariffs should level the playing field and allow domestic manufacturers to regain a foothold in the market.

“Today’s remedy vote by the ITC is a great victory for the USW, its members and for all U.S. tire workers. The tariffs voted by the commissioners should remedy the market disruptive surge in Chinese tire imports that have caused harm to the domestic industry,” Leo Gerard USW international president said in a press release.

The final decision is now in the hands of the White House. President Barack Obama has until Sept. 17, at which time he can implement the ITC’s recommendations, impose his own trade remedy or even do nothing if he finds that limiting Chinese tire imports could hurt the economy.

The USW expressed confidence that President Obama would follow the recommendations of the ITC.

“Both our own economic analysis as well as that of the ITC show that the recommended tariffs will have significant beneficial effects for the domestic industry,” Tom Conway, USW international vice president, said in a press release. “We applaud the Commission’s decision and look forward to working with the Obama Administration to see that it is fully implemented.”

Source Bloomberg News:

The United Steelworkers (USW) applauded today’s vote by the International Trade Commission (ITC) for a tariff remedy in the union’s Section 421 petition against a surge of low-priced and market disrupting consumer tires from China.

…

The USW president says he anticipates when President Obama receives the final recommendations from the U.S. Trade Representative on Sept. 2, he will agree with the findings and support enforcement of the recommended tariff levels. “It is time for the promise of enforcing U.S. trade laws to be fulfilled,” Gerard said.

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