Almost a year has passed since the U.S. imposed a tariff upon consumer tires imported from China.
This tariff, which in its first 12 months added 35% to the existing 4% import duty, has been applauded in some quarters. United Steelworkers international president Leo Gerard, for example, stated in an April 2010 letter to President Obama that, “the domestic industry is, in fact, continuing to make good progress in recovering from the near fatal blow caused by the market disruption from a surge in Chinese consumer tire imports.”
Yet such opinions are not universal. As the tariff’s first anniversary approaches, the U.S.-China Business Council (USCBC) has also drafted its own letter to the president, in which it states it “has found no evidence that the tariffs on low-end Chinese tires have had a positive effect on American jobs, and we suspect the tariffs have had an overall negative economic impact on American consumers.”
In a related statement, the USCBC, a non-profit organization of some 220 American companies that do business with China, highlights U.S. Bureau of Labor Statistics showing overall tire manufacturing employment in the U.S. to have declined 10% in the first five months of 2010 compared with the same period last year, prior to the tariff’s implementation.
“There have been a few announcements of tire manufacturers expanding production, but they are being made for higher end tires and specialty products like aviation tires – not the products covered by the tariffs,” the USCBC reported.
According to the USCBC, the tariffs have been effective in curbing imports of consumer tires from China. However, it notes that imports of low-end tires into the U.S. have actually substantially increased in recent months and wholesalers have substituted their Chinese sourced tires with those produced in other countries. As the USCBC informs Obama, these imports from other low-cost countries “are higher overall than before the tariffs.” Furthermore, the council relays news from tire industry sources that prices for these tires have increased 10% to 20%, thereby “impacting American pocketbooks.”
“Comparing the first half of 2010 with the same period in 2009, total U.S. tire imports affected by the 421 tariff are up 21% by volume and 30% by value,” the USCBC reports. “China’s share of those imports has dropped from a peak of 45% in August 2009 to just 24% in June 2010. In other words, Americans are buying more tires from overseas – we’re just getting the tires from places other than China.”
In light of these figures, the USCBC urges President Obama to use his “authority under Section 421 (of the U.S. Trade Act of 1974) to request that the U.S. International Trade Commission provide a report on the effect of the changes in the tire tariffs on American consumers and job creation.” The council says an objective report on the issue will “provide needed clarity” on how tariffs affect the U.S. economy and whether they achieve the goals they were designed to meet. (Tyres & Accessories)
