U.S. to Impose Tariff on Tires From China
By Peter Whoriskey and Anne Kornblut
Washington Post Staff Writers
Saturday, September 12, 2009
In one of his first major decisions on trade policy, President Obama opted Friday to impose a tariff on tires imported from China, a move that risks angering the nation's second-largest trading partner.
The decision is intended to bolster the ailing U.S. tire industry, in which more than 5,000 jobs have been lost over the past five years, as the volume of Chinese tires in the market has tripled.
But it threatens to upset the strategically important relationship between the United States and China and comes on the eve of the Group of 20 summit in Pittsburgh, where world leaders are expected to discuss cooperation on trade issues.
The tariff will amount to 35 percent the first year, 30 percent the second and 25 percent the third.
While a federal trade panel had recommended even higher levies -- of 55, 45 and 35 percent, respectively -- the decision is considered a victory for the United Steelworkers union, which had filed the trade complaint.
"The president sent the message that we expect others to live by the rules, just as we do," Leo W. Gerard, president of the union, said Friday night.
China's government and its tire manufacturers, as well as tire importers and some U.S. tire manufacturers with plants overseas, had strenuously objected to the measure.
"The president decided to remedy the clear disruption to the U.S. tire industry based on the facts and the law in this case," the White House said in a statement released Friday night.
Obama's decision signals a marked shift from the policy of the Bush administration, which had rejected taking action in each of four similar cases it reviewed.
Congress passed legislation in 2000 that allows the United States to impose tariffs and other trade protections if a surge in Chinese imports damages a U.S. industry.
China agreed to the provision while negotiating to join the World Trade Organization, but until Friday the general "safeguard" provisions of the law had never been invoked.
The tire tariff, which takes effect Sept. 26, represents the first such case under Obama, and his action will be watched closely.
During the campaign he had pledged to "crack down on China" and "work to ensure that China is no longer given a free pass to undermine U.S. workers," as his Web site put it.
But his commitment to that point of view was thrown into doubt during the primaries when a Canadian official said Obama's economic adviser, Austan Goolsbee, had made private assurances that his criticism of the North American Free Trade Agreement was simply political posturing.
Marguerite Trossevin, who represents a coalition of U.S. tire companies that import Chinese tires, said the tariff decision is "very disappointing."
She predicted price increases for U.S. consumers and losses for U.S. tire importers.
"For the U.S. tire distributors and consumers, there's going to be a heavy burden to bear," she said. "It sends the message that special interests will get protection if they ask for it -- regardless of what that means for broader trade policy."
A spokesman for China on trade issues could not be reached Friday night.
But last month, a Chinese deputy commerce minister, Fu Ziying, said at a news conference that officials "hope the U.S. government will refrain from taking action, for the long-term healthy and stable development of U.S.-Chinese relations." Fu added: "The case is neither supported by facts, nor does it have valid legal grounds."
David Spooner, a lawyer representing the Chinese tire industry said the tariff is unlikely to result in more U.S. jobs.
"U.S. tire manufacturers years ago decided to move production of low-end tires offshore," he said. "Frankly, a temporary tariff is not going to get them to change their business plan."
By Peter Whoriskey and Anne Kornblut
Washington Post Staff Writers
Saturday, September 12, 2009
In one of his first major decisions on trade policy, President Obama opted Friday to impose a tariff on tires imported from China, a move that risks angering the nation's second-largest trading partner.
The decision is intended to bolster the ailing U.S. tire industry, in which more than 5,000 jobs have been lost over the past five years, as the volume of Chinese tires in the market has tripled.
But it threatens to upset the strategically important relationship between the United States and China and comes on the eve of the Group of 20 summit in Pittsburgh, where world leaders are expected to discuss cooperation on trade issues.
The tariff will amount to 35 percent the first year, 30 percent the second and 25 percent the third.
While a federal trade panel had recommended even higher levies -- of 55, 45 and 35 percent, respectively -- the decision is considered a victory for the United Steelworkers union, which had filed the trade complaint.
"The president sent the message that we expect others to live by the rules, just as we do," Leo W. Gerard, president of the union, said Friday night.
China's government and its tire manufacturers, as well as tire importers and some U.S. tire manufacturers with plants overseas, had strenuously objected to the measure.
"The president decided to remedy the clear disruption to the U.S. tire industry based on the facts and the law in this case," the White House said in a statement released Friday night.
Obama's decision signals a marked shift from the policy of the Bush administration, which had rejected taking action in each of four similar cases it reviewed.
Congress passed legislation in 2000 that allows the United States to impose tariffs and other trade protections if a surge in Chinese imports damages a U.S. industry.
China agreed to the provision while negotiating to join the World Trade Organization, but until Friday the general "safeguard" provisions of the law had never been invoked.
The tire tariff, which takes effect Sept. 26, represents the first such case under Obama, and his action will be watched closely.
During the campaign he had pledged to "crack down on China" and "work to ensure that China is no longer given a free pass to undermine U.S. workers," as his Web site put it.
But his commitment to that point of view was thrown into doubt during the primaries when a Canadian official said Obama's economic adviser, Austan Goolsbee, had made private assurances that his criticism of the North American Free Trade Agreement was simply political posturing.
Marguerite Trossevin, who represents a coalition of U.S. tire companies that import Chinese tires, said the tariff decision is "very disappointing."
She predicted price increases for U.S. consumers and losses for U.S. tire importers.
"For the U.S. tire distributors and consumers, there's going to be a heavy burden to bear," she said. "It sends the message that special interests will get protection if they ask for it -- regardless of what that means for broader trade policy."
A spokesman for China on trade issues could not be reached Friday night.
But last month, a Chinese deputy commerce minister, Fu Ziying, said at a news conference that officials "hope the U.S. government will refrain from taking action, for the long-term healthy and stable development of U.S.-Chinese relations." Fu added: "The case is neither supported by facts, nor does it have valid legal grounds."
David Spooner, a lawyer representing the Chinese tire industry said the tariff is unlikely to result in more U.S. jobs.
"U.S. tire manufacturers years ago decided to move production of low-end tires offshore," he said. "Frankly, a temporary tariff is not going to get them to change their business plan."
