Tyre tariff ineffective, Obama told

In his 24 January State of the Union address, US President Barack Obama claimed the country’s trade cases against China have made a difference. Singling out a particular sector, Obama said “over a thousand Americans are working today because we stopped a surge in Chinese tyres.” Words that should, on the face of it, bring cheer to the US tyre industry.

Unfortunately not everybody sees eye to eye with Mr. Obama on this point. Roy Littlefield, executive vice-president of US industry group the Tire Industry Association, told the Wall Street Journal that the tariff against Chinese tyres “just isn’t working” when it comes to saving US jobs. While the tariff has slowed the entry of Chinese tyres into the US over the last couple of years, imports from other lower cost countries have filled the void. Furthermore, Littlefield points out that the tariff’s implementation “really hurt a lot of people in the industry-smaller businesses that geared up to bring these tyres in from China.”

Forbes comments that China is a beloved scapegoat for an America unemployed. The publication admits that some jobs have been created within the tyre industry; it quotes the US Bureau of Labor Statistics figures of around 51,600 in 2010 and 51,700 a year later. Yet it also points out that while the tariff against Chinese tyres led to a 30 per cent reduction in tyre imports from that country between 2009 and 2011, this did not lead to 30 per cent more tyres being produced in America. Using US International Trade Commission data, Forbes shares that between 2009 and 2011 the US imported 30 per cent more tyres from Canada, 110 per cent more from South Korea, 44 per cent more from Japan, 152 per cent more from Indonesia, 154 per cent more from Thailand, 117 per cent more from Mexico and 285 per cent more from Taiwan.

The key argument why the tariff has not resulted in the jobs claimed by Obama is that it mainly targets the type of tyres not produced in the US. Goodyear spokesman Keith Price told the Wall Street Journal that “the tariffs didn’t have any material impact on our North American business. The stuff coming in from China is primarily low end. We got out of that market years go.” Similar comments were voiced by John Frisbie, president of the US China Business Council in a speech on the evening of 24 January. Frisbie stated he and the lobby organisation “disagree that the tariffs on imports of low-end Chinese tyres have had any positive effect on American jobs or the American economy. All evidence suggests that the beneficiaries have been other low-end tyre producers in Asia and Mexico.”