And now: protectionists

Tires imported from China have been carrying a duty of 4 percent. The Obama administration, starting in two weeks, will increase the tariff to 39 percent for one year, which would drop to 34 after one year and 29 after the second, a response to a Section 421 request by the United Steelworkers, who claimed cheap Chinese imports had cost 5000 jobs.

It is unclear how blocking the importation of Chinese tires is going to help anyone here: imports from China represent only about 11 percent of the $16.4-billion US tire market, and less than 30 percent of total tire imports. There are plenty of not-quite-so-low-cost producers, some in the Pacific Rim, some in central Europe, who could take up the slack, but prices at the bargain end of the tire market will inevitably rise.

Not that there’s anything particularly right with that:

The absence of tires from China in the market will raise costs to downstream consuming industries, including automobile manufacturers, will limit consumer choices and affect most seriously those with the fewest resources. Thus, these tariffs will be the most regressive of taxes. Consumers will purchase fewer tires, which will not benefit U.S. tire manufacturers or their workers. The loss of tire sales will also eliminate jobs in industries such as tire wholesalers and distributors employing many thousands of U.S. workers. Many aftermarket tire dealers are small businesses, the backbone of employment in the United States. At this time, we must do better than to sacrifice small businesses to the demands of a few workers.

Few if any US automobile manufacturers actually use Chinese tires, though the absence of downward price pressure can be expected to increase their costs anyway.

As for the folks with the “fewest resources,” they’re routinely screwed already, and this is just one more quarter-turn clockwise. If the beater they bought from a dealer in third-hand cars is showing cord, they’re not going to pop for Goodyears at a hundred bucks apiece if they can find something, anything, that will do the job, however inadequately.

This is the Obama administration’s first Section 421 case, and the seventh to be brought before the US International Trade Commission since the section was added as a response to China’s admission to the WTO in 2001. During the Bush administration, the ITC rejected two of six petitions received; Bush himself rejected the other four — not that W. was such an avid free-trader, but he apparently learned his lesson after attempting a 30-percent duty on steel imports in his first year in office.

(Via The Truth About Cars.)







5 comments

  1. paulsmos »

    12 September 2009 · 3:38 pm

    The One is merely fellating his union bosses….get used to it…..hope/change…go Bandag

  2. MikeH »

    12 September 2009 · 5:25 pm

    Damn those workers wanting to protect the U.S. industrial base. Thankfully, us Oklahomans are represented by conservative, anti-union, free-traders like Congressman Tom Cole, who know how sacred free trade really is.

    By Chris Casteel, The Oklahoman, Oklahoma City
    30 June 2009

    Rep. Tom Cole, R-Moore, was among those who urged the commission earlier this month to take action, saying the Chinese imports threatened jobs at two large tire plants in Ardmore and Lawton.

    Cole said Monday that the commission “has taken a step in the right direction to strengthen and enforce U.S. trade laws. In the coming months, as the ITC’s recommendations are reviewed by President Obama, I hope he will use the tools provided in American trade law to support our nation’s tire workers. It’s clear that action needs to be taken to curb the glut of imported tires from China.”

    The truth is that the reality of anything close to free trade is a joke. Here are just a few of the items China added to their tariff import list just this year. China’s entire tariff/VAT list is 31,477 pages long with approximately 20 items per page. From E-to-China.com (membership required)

    Tomato paste – 20%
    Strawberries – 15.5%
    Fermented beverages – 42.3%
    Polyester cloth – 16.9%
    Nylon – 10%
    Wool – 14%
    Outer soles of rubber, plastics, leather or composition leather – 24%
    Station wagons (with 9 seats or less) – 25%
    Crosscountry cars (4WD) – 25%
    Motor oil coolers – 10%

    Of course, China does need the money to finance our debt and buy up Wall Street. Nobody ever said free trade was free.

  3. Jeffro »

    12 September 2009 · 5:27 pm

    My company uses some fairly esoteric tire sizes for our lowboy trailers, and the only companies that make them anymore are the Chinese.

    I’m sure this will bother Teh Won not in the least, since my company, me and the entire state of Kansas didn’t vote for him in the first place.

  4. Charles Pergiel »

    13 September 2009 · 1:11 am

    I looked at the USA today story, but I am not sure I want to understand. The recall was issued by a government agency because a company conducted a more rigorous test than required and the tires failed? It could be a case of people doing the right thing, but I don’t buy it, especially since the story comes from Rupert.

  5. CGHill »

    13 September 2009 · 9:57 am

    Which makes you wonder how good that required test might be. When the UTQR tire-rating system came out, the lowest grades acceptable for Traction and Temperature (Resistance) were C; a C in Temperature was passing but a C in Traction was marginal at best.

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