US Business Group Urges Obama to Get Facts on China Tyre Tariff

Almost a year has passed since the United States imposed a tariff upon consumer tyres imported from China. This tariff, which in its first 12 months added 35 per cent to the existing four per cent import duty, has been applauded in some quarters. United Steelworkers international president Leo W. Gerard, for example, stated in an April 2010 letter to US 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 tyre imports.” Yet such opinions are not universal. As the tariff’s first anniversary approaches, the US-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 tyres 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 organisation of some 220 American companies that do business with China, highlights US Bureau of Labor Statistics showing overall tyre manufacturing employment in the US to have declined ten per cent 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 tyre manufacturers expanding production, but they are being made for higher end tyres and specialty products like aviation tyres – not the products covered by the tariffs,” the USCBC reported.

According to the USCBC, the tariffs have been effective in curbing imports of consumer tyres from China. However it notes that imports of low-end tyres into the US have actually substantially increased in recent months and wholesalers have substituted their Chinese sourced tyres with those produced in other countries. As the USCBC informs Mr. Obama, these imports from other low-costs countries “are higher overall than before the tariffs.” Furthermore, the council relays news from tyre industry sources that prices for these tyres have increased 10 to 20 per cent, thereby “impacting American pocketbooks.”

“Comparing the first half of 2010 with the same period in 2009, total US tyre imports affected by the 421 tariff are up 21 per cent by volume and 30 per cent by value,” the USCBC reports. “China’s share of those imports has dropped from a peak of 45 per cent in August 2009 to just 24 per cent in June 2010. In other words, Americans are buying more tyres from overseas – we’re just getting the tyres from places other than China.”

In light of these figures, the USCBC urges Barrack Obama to use his “authority under Section 421 (of the US Trade Act of 1974) to request that the US International Trade Commission provide a report on the effect of the changes in the tyre tariffs on American consumers and job creation.” The council says an objective report on the issue will “provide needed clarity” on how tariffs such as this affect the US economy and whether they achieve the goals they were designed to meet.