President Imposes Tariffs on Chinese Tire Imports

Major trade decision to protect U.S. jobs against illegal actions is immediately criticized by the Chinese Minister of Commerce.

by on Sep.12, 2009

The President makes good on a campaign promise and enforces the law.

The President makes good on a campaign promise and enforces the law.

The White House announced late Friday night that it would follow the recommendation of the U.S. Trade Representative and impose tariffs for three years on Chinese-made tires starting in 15 days.

The three-year penalty, which adds an additional tariff on top of the  current 4% of 35% ad valorem in the first year, 30% in the second, and 25% in the third, is being imposed after a finding by the United States International Trade Commission that a harmful surge of imports of Chinese tires disrupted the U.S. market for tires. An estimated 5,000 U.S. jobs were eliminated during the past five years, as Chinese imports tripled and seven U.S. tire plants closed.

President Obama also announced that Trade Adjustment Assistance would be targeted to help affected workers, industries, and communities immediately, while the tariff changes take effect.

“When China came in to the World Trade Organization, the U.S. negotiated the ability to impose remedies in situations just like this one,” said United States Trade Representative Ron Kirk.

President Bush chose not to do so in several similar cases under his administration.

“This Administration is doing what is necessary to enforce trade agreements on behalf of American workers and manufacturers. Enforcing trade laws is key to maintaining an open and free trading system,” Kirk concluded.

The trade panel had recommended a 55% tariff in the first year, 45% in the second, and 35% in the third year. The President decided the lower levels of 35%, 30% and 25%, according to Robert Gibbs, Obama’s press secretary.

No Tariffs!

No Tariffs!

Nonetheless, the decision is a victory for the United Steelworkers Union, which filed the trade complaint last spring under Section 421 of the 1974 Trade Act.

“For far too long, workers across this country have been victimized by bad trade policies and government inaction. Today, President Obama made clear that he will enforce America’s trade laws and stand with American workers,” USW International President said. “The President sent the message that we expect others to live by the rules, just as we do,” the  direct speaking Gerard continued.

“China and its agents here in the U.S. tried every trick in the book to protect their interests. They hired former government officials and paid them countless dollars to lobby their case. They paid for trumped up studies to support their efforts and used front groups to lobby their cause and to influence politicians,” Gerard claimed.

The Chinese governemtn isn't happy with the ruling.

The Chinese government isn't happy with the ruling it calls protectionist.

China’s Ministry of Commerce said that the move violated World Trade Organization rules. “China strongly opposes this serious act of trade protectionism by the U.S.,” the ministry said, The Associated Press reported.

“These remedies are a necessary response to the harm done to U.S. workers and businesses, designed to achieve the objective of curbing what the ITC determined was a harmful surge of Chinese tires into the U.S. market,” said Kirk.

“China is America’s second largest trading partner, and the health and strength of our relationship are very important to both countries. We consulted with China as allowed for under the WTO. This decision has been based carefully on America’s rights under WTO rules, namely China’s accession agreement, and on sound economic calculations,” Kirk said.

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3 Responses to “President Imposes Tariffs on Chinese Tire Imports”

  1. SR Bloxham says:

    Tires may be the trade issue of the week but what will happen when the USA gets flooded with nonferrous metals from the 900 mining properties recently opened on both sides of the new Chinese Tibet Rail Road.The Chinese symbols for Tibet translate into “Treasure Chest”. The RR wasn’t built for the tourist trade.Tires may prove to be the least of our worries.

  2. RJ Krestel says:

    Decisions like this will have adverse effects with world trade and still won’t solve the problem of American jobs.

    • Ken Zino says:

      RJ: World trade is an abstract concept that has had direct negative effects on U.S. middle class jobs.

      It is often espoused in my experience by academics who are in protected jobs because of tenure.

      It is also the mantra of companies that move money and jobs offshore to avoid paying taxes here, while still enjoying the stability and protection of U.S. law and our armed forces.

      In this case, it was trade that violated the rules of the World Trade Organization and U.S. law. The Chinese market is protected by the Chinese government. We need to create jobs here, not in other countries in my view.

      Our trade deficit with China was $268 billion in 2008, an all-time record.