Obama Imposed a 3 Year Tariff on Chinese-made Tire Imports

President Barack Obama slapped a stiff tariff on the import of Chinese-made tires into the U.S., but elected not to act as tough as he could have. The politically charged decision appeared calibrated to strike a middle ground between satisfying his influential labor constituency while signaling to much-needed China that the U.S. values the bilateral relationship. It comes while the White House is attempting to hold together the Democratic majority in Congress in order to pass the President’s No. 1 priority – health care reform.

In the Sept. 12 decision, Obama imposed a 3-year tariff on Chinese-made tire imports. In the first year, it will be set at 35%, far below the 55% levy recommended by the U.S. International Trade Commission. The second year it will be 30%, and the final year 25%. The tariffs begin in 15 days.

The decision was in response to a complaint by the United Steelworkers union, which invoked a provision in China’s agreement to join the World Trade Organization that allows protection from surging imports from the country. The union documented a tripling of Chinese tire imports from 2004 to 2008 that it said threatened thousands of jobs at U.S. tire factories. No U.S. tiremakers backed the complaint. Most major U.S. tiremarkers manufacture tires in China.

The ITC ruled in the union’s favor. Then Obama had to decide whether to accept the decision, and if so to what degree. He issued his decision five days before a Sept. 17 deadline, and one night after commencing a hard push to get health care reform approved in Congress.

United Steelworkers President Leo Gerard said in a statement that the decision “means China and other countries can no longer assume they can engage in predatory trade practices with impunity.” On Sept. 9, Gerard had told reporters in a Washington news conference that he expected tough sanctions by Obama.

In a statement, White House spokesman Robert Gibbs said Obama “decided to remedy the clear disruption to the U.S. tire industry based on the facts and the law in this case.” Separately, U.S. Trade Representative Ron Kirk said, “This Administration is doing what is necessary to enforce trade agreements on behalf of American workers and manufacturers. Enforcing trade laws is key to maintaining an open and free trading system.”

The decision was cheered by key congressional Democrats. Rep. Sander Levin, chairman of the House Trade Subcommittee, said, “This remedy is consistent with WTO rules governing China’s membership, and President Obama is making good on his commitment to pursue a new trade policy that puts Americans workers, farmers and businesses first.” Senate Finance Chairman Max Baucus said, “Strong trade enforcement must be the cornerstone of U.S. international trade policy.”

But David Spooner, a lawyer with Squire, Sanders & Dempsey who represents trade associations of China’s tire producers, said in a statement, "These tariffs are unwarranted. It's troubling that the Administration would invoke an import surge safeguard over the objections U.S. industry and in response to falling imports. Not a single U.S. tire company supports’ the tariffs."