But the proposal, if approved by President Barack Obama, won’t save a single American job. As a resident of Michigan – a state that has been particularly hard-hit by the recession – and as someone deeply involved in the tire industry, I’d be in favor of anything that would help our economy. This won’t.
In April, the Steelworkers petitioned the trade commission to declare that the U.S. tire industry has been harmed by an increase in tire imports from China. The commission last month proposed imposing a sweeping tariff, which would have the practical effect of banning Chinese-made tires.
But the tariff would only lead tire distributors and retailers around the nation to buy their tires from other countries. It would also cause a temporary tire shortage, likely leading to higher tire prices and additional financial burdens on thousands of independent tire businesses.
I’ll leave it to U.S. trade officials to decide whether a tariff on tires is worth igniting a possible trade war with China, one of our largest trade partners. But speaking as a small businessman and a leader of a family tire business, I know for certain that a tariff on tires is not good for the typical penny-pinching consumer.
My family’s company has 70 Michigan-based employees and sells tire brands such as Cooper, Pirelli, Continental, General and GT Radial to thousands of independent businesses.
While my business sells many different brands of tires at many price levels, I have a stake in both sides of this argument. Indeed, our largest supplier is the U.S.-based Cooper Tire and Rubber Co., and our second largest is Giti Tire, which has manufacturing facilities in China.
I can tell you first-hand that consumers and tire businesses will not switch their purchases to U.S.-based manufacturers if a tariff is imposed. The tariff will raise tire prices for consumers. Tire importers – under pressure from cost-sensitive consumers – will turn to the next best price option – tires made in South Korea, Mexico, Indonesia and other countries.
The simple fact is that American companies don’t manufacture low-cost tires, preferring to focus on higher-profit tires. You can’t ask hard-pressed consumers to replace their Chinese-made tires with higher-priced American-made tires. That’s like saying import restrictions on the Kia Sorento would lead Americans to buy Cadillac Escalades.
With unemployment at 9.5% nationally, Americans are in the throes of very hard times, with some regions like Michigan hit even harder as unemployment hovers over 15%. I am concerned that a tariff would impose even more pain, both financial and physical.
When people replace their tires, consumers typically look for value tires. But a tariff would push the cost of these tires higher, forcing some to wait too long to replace worn-out tires, endangering themselves and others on the road.
The Obama administration does not have to accept the ITC’s recommendation. Obama has until September to render his own verdict – and he can decide to ignore the ITC if he believes that the remedy would cause more economic harm than good. And not imposing a quota would be better for the U.S. economy and the tire industry than doing so.
The bottom line for everyday Americans: Tariffs on tires from China will only hurt jobs in my business and many of my customers’ businesses. Tariffs also would cajole tire importers to bring in more tires from other countries and take away choices from the most cost-conscious customers. (Tire Review/Akron)
