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.
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.)