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Tariffs for Faulty Chinese Tires

By       Message Dustin Ensinger       (Page 1 of 1 pages)     Permalink    (# of views)   No comments

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A recent recommendation by the U.S. International Trade Commission is dividing organized labor and tire industry representatives, pitting President Obama at the center of the debate.

One of America's most powerful unions - the United Steel Workers - and the nation's second largest tire manufacturer - Cooper Tire & Rubber Co. - are both lobbying the president on the same issue but are recommending entirely different courses of action.

In June, the U.S. ITC 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.

The USW is pushing the president to accept the recommendations of the USITC and impose stiff tariffs on all Chinese tire imports, which they say are unsafe and have put thousands of Americans out of work.

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"Our nation's job loss numbers at tire factories dramatically understate the impact China's flooding imports have caused in the communities where our represented workers live," United Steel Workers President Leo Gerard told a public hearing earlier this month, according the AFL-CIO Now Blog. "The consequences of lost tire production jobs have extended to many thousands of other jobs in supporting industries and suppliers that have also been lost."

Cooper Tire, which employs USW union members in its factories, is fearful that imposing the suggested tariffs on Chinese tire imports would hamper its ability to import low-cost tires to China and is actively lobbying against the White House taking any action against the Asian nation.

"Cooper Tire invested in China because it could not compete on costs with lower-cost tires being imported by other U.S. producers and importers from many different countries, not just China," the Findlay, Ohio-based company said in a filing to the U.S. Trade Representative's office. "The tires produced in China are made at a lower cost and allow Cooper Tire to even-out its overall production costs."

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Cooper's largest competitor, Goodyear Tire & Rubber Co., has taken no position on the issue, saying only that it supports "free and fair trade."

The USITC decision stems from a complaint filed by the United Steel Workers union, which represents 15,000 employees at 13 tire plants across the country. The USW alleged in its complaint that China has damaged the domestic 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.

The loss of domestic production has resulted in massive job loss in the industry. According to the USW, the deluge of cheap Chinese imports 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.

In the end, the ITC sided with the USW, voting to recommend imposing tariffs of 55 percent in the initial year, 45 percent in the second year and 35 percent in the final year on all Chinese tire imports.

President Obama must make a decision on what to do by Sept. 15. He can follow the recommendation, ignore it and do nothing or even impose trade sanctions of his own making.

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A bipartisan group of 11 U.S. Senators are already putting the pressure on him, urging him to accept the ITC recommendations and send a message to China that America will not sit back and allow its mercantilist policies to continue as the previous administration did.

"An important American industry - with manufacturing facilities in thirteen states across the nation and employing over 31,000 workers - is on its knees due to market disruption caused by imports of Chinese tires," a bipartisan group of 11 Senators wrote in a letter to President Obama. "Your decision to adopt the ITC's recommendation would remedy this disruption, save thousands of U.S. manufacturing jobs, and halt the further decline of the U.S. tire industry."

 

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Dustin Ensinger graduated from The Ohio State University with a Bachelor of Arts in Journalism and Political Science. He is a contributing journalist for EconomyInCrisis.org.

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