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Obama to impose strict tariffs on Chinese tires

A federal agency concludes that Chinese-made tires have disrupted the U.S. market and cost jobs. Some in the Chinese tire industry warn of retaliation.

September 12, 2009|Don Lee and David Pierson

WASHINGTON AND BEIJING — In a decision that could roil trade tensions with Beijing, President Obama agreed Friday to impose hefty tariffs on tires imported from China.

The decision came after the U.S. International Trade Commission, a federal agency, determined that a surge of Chinese-made tires had disrupted the domestic market and cost thousands of jobs in the U.S.

Within 15 days, the U.S. would add a duty of 35% in the first year, 30% in the second and 25% in the third on passenger vehicle and light-truck tires from China. That is less than the 55% tariff recommended by the trade panel, but analysts said it would still be large enough to keep most Chinese tires out of the competitive U.S. market.

"The president decided to remedy the clear disruption to the U.S. tire industry based on the facts and the law in this case," White House Press Secretary Robert Gibbs said in a statement.

The decision was a victory for the United Steelworkers union, which filed the complaint in May. The union represents about half of the more than 30,000 tire production workers in the U.S.

Chinese tire imports have more than tripled since 2004, and an industry trade publication has estimated that 4,400 jobs in the U.S. tire industry have been lost in that time.

Chinese officials have been highly critical in recent weeks of the proposed tariff, calling it protectionism that violates World Trade Organization rules. They contend that the global financial crisis, not Chinese imports, are to blame for the slowdown in U.S. tire sales.

Under the trade commission's rules, Obama had until Sept. 17 to make a decision on the case.

The announcement comes about two weeks before a meeting in Pittsburgh of the Group of 20 major developed and major emerging economies, where trade and protectionism will be among the topics on the agenda.

Beijing's rising influence in global affairs and large holdings of American bonds makes the tariff issue especially sensitive for Washington. China has long run a large trade surplus with the U.S.

The decision to impose tariffs comes when Sino-American relations are better than at any recent time, thanks to cooperation in areas such as climate change, said Shi Yinhong, director of the Center for American Studies in Beijing.

"Unfortunately, there are some elements here who will call this protectionism," Shi said. "But I don't think it will have that much of a negative impact. The volume of trade is still very large."

Other analysts disagreed, saying Beijing would take the decision very seriously. Some in the Chinese tire industry warned of retaliation.

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don.lee@latimes.com

david.pierson@latimes.com

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