Cheap Chinese Tires Keep Rolling In

[FrankRep]

As inexpensive automobile tires made in China keep rolling into the United States and U.S. tire manufacturers (like Cooper) struggle to stay in business, President Obama will soon have to decide whether or not to impose the 55-percent tariff that was recommended by the U.S. International Trade Commission. By Steven J. DuBord

Cheap Chinese Tires Keep Rolling In


Steven J. DuBord | The New American
10 September 2009


As inexpensive Chinese-made automobile tires keep rolling into the United States and U.S. tire manufacturers struggle to stay in business, President Obama will soon have to decide whether or not to impose a tariff on the imports.

The U.S. International Trade Commission, a federal panel that deals with trade-related issues, voted for tariffs back in June, as The New American reported. The United Steelworkers Union pointed out at the time that 5,100 U.S. workers had already lost their jobs, and 3,000 more were in danger of losing theirs this year. According to the union, Chinese tire imports rose 215 percent from 2004 to 2008, eventually hitting 46 million tires valued at $1.7 billion in 2008.

The Washington Post noted on September 8 that the share of the U.S. market held by Chinese tires has risen from five percent to 17 percent. The Post specifically mentions a Cooper tire plant in Albany, Georgia, that is being shut down as a result of the influx of Chinese tires. More than 2,000 jobs are being lost in the small town, dealing a devastating blow to the entire community.

President Obama will need to decide by September 17 whether or not to accept the International Trade Commission’s recommendation to assess a 55-percent tariff on Chinese tires. Opponents of the tariff claim that U.S. tire makers have intentionally shifted their production of inexpensive tires overseas, allowing the companies to focus on making more expensive tires with higher profit margins here in America. Also, if China’s imports are curtailed, other countries with low manufacturing costs will just step in to fill the void.

Fu Ziying, a deputy commerce minister for China, told a news conference in August that his country hopes “the U.S. government will refrain from taking action, for the long-term healthy and stable development of U.S.-Chinese relations. The case is neither supported by facts nor does it have valid legal grounds.”

Others disagree, pointing to China’s currency manipulation and track record of protectionist policies as evidence of foul play. The previous Bush administration was asked four times to take steps to protect U.S. industries, but it chose not to do so. Now President Obama will have to decide if he will keep his campaign promise to “work to ensure that China is no longer given a free pass to undermine U.S. workers,” as his website stated.

The unemployed workers from the Albany plant provide a case in point to support tariffs. Joseph Roberts was a shift manager in the curing and finishing department, but now, at age 49, he says, “I’m starting all over again.” Byron Botdorf, 59, is attending the Albany Technical College to learn welding.

“My son got into welding — it’s a good trade,” Botdorf said. “But here’s the thing with this economy: Everything nowadays is made in China. Go to Wal-Mart. It’s hard to find anything down there that isn't made in China. The last pair of boots I bought were made in China. I don’t like buying China stuff — but you kind of have to.”

Even the Cooper company is caught somewhat in the middle because they make low-price tires in China and ship them back to the United States. For this reason, apparently, Cooper itself is oddly against imposing a tariff.

Botdorf was somewhat taken aback when he learned that Cooper was opposing the tariff, but he then noted that the company might be more concerned about its shareholders than its employees: “Leaving things as they stand might be the right thing for American companies, but something has to be done for the workers, too. Otherwise we’ll become a nation of retailers.”

Botdorf’s keen observation is an accurate assessment of the so-called free-trade agreements America has entered into with the WTO and the FTAA. These arrangements are letting the air out of America’s manufacturing capability. Only by revoking these detrimental pacts and taking care of its own citizens first can the United States re-inflate U.S. industries and get American manufacturers rolling once again.


SOURCE:
http://www.thenewamerican.com/index...u-46/1855-cheap-chinese-tires-keep-rolling-in

 

[Young Paleocon]

So is the author in favor of protectionism?

 

[tmosley]

This article should be subtitled "How to Roll a Tide of Irresistible Destruction Over the Shores of America".

A trade war with China will not end well for us.

 

[Sarge]

Well this ought to do the trick,

http://www.bloomberg.com/apps/news?pid=20601110&sid=a9klWrSeipck

Let the war begin.

 

[devil21]

I got a brand new set of chinese tires on my Acura and they're great. Very grippy, very quiet, very sturdy, and very affordable. Good luck outfitting an SUV with 17" wheels with American tires for under $400.

American companies continue to *choose* not to be competitive. I'd be all for buying American tires but when the best price they can offer is $600+ then what do they really expect me to do? Tire factories are just another example of UNIONS sucking the life out of American manufacturing.

 

[legion]

buying cheap/used tires is the worst thing you can do. its more dangerous than driving around without any brakes.

read reviews at tirerack.com

 

[jon_perez]

Didn't a similar thing happen in the 80s with cheap, high-quality Japanese imports? I remember a couple of Japanese companies being accused of dumping chips in the US. Remember the movie "Rising Sun" ? Back then, the prospect of the Japanese economic might overwhelming the US was the paramount fear in the minds of Americans.

It would seem that "American" (or at least what nominally passes for it in the globalized economy) industries were able to retool to meet the challenge. Intel is far and away still the most dominant chipmaker on the planet.

I'm not sure you can say the same about the "American" automobile brands though. Still, consider the fact that the major Japanese auto companies have actually located many of their plants in the US.

The answers, I believe, are going to be far more complex than just to tariff or not to tariff.

 

[KCIndy]

buying cheap/used tires is the worst thing you can do. its more dangerous than driving around without any brakes.

read reviews at tirerack.com

Agreed...

There's not much that will ruin your day faster than to have a blowout at 75 mph and find yourself doing sideways somersaults down the median of the interstate....

 

[devil21]

Agreed...

There's not much that will ruin your day faster than to have a blowout at 75 mph and find yourself doing sideways somersaults down the median of the interstate....

Yeah, since that never happens with American tires

http://www.tiredefects.com/firestone-tire-failure.cfm

Btw, few tires are actually manufactured in the US anymore.

 

[squarepusher]

This article should be subtitled "How to Roll a Tide of Irresistible Destruction Over the Shores of America".

lol

 

[Jeez]

buying cheap/used tires is the worst thing you can do. its more dangerous than driving around without any brakes.

read reviews at tirerack.com

Just because it is cheap does not mean it is inferior same argument was used against Japanese cars in the 80s. US must adopt policies similar to china to stay competitive (tough stance against unions/strikes, relaxed environmental regulations, no min wage etc).

 

[Zippyjuan]

Early Japanese imports WERE garbage. So were early Chinese imports. Both improved. I don't have a car but still would not buy the cheapest tires for my car. Some things are worth spending a little more on. Between direct subsidies to companies to the indirect one of keeping the value of their currency low China gives their manufacturers advantages over those in other countries.

 

[denison]

if obama tries to use tariffs then all China has to do is drop the dollar and we're screwed. no win-win situation here.

 

[Epic]

protectionism is dumb

the media doesn't understand economics

sure, the american tire company would be helped, but consumers would be hurt to an even greater extent, and you can be sure that china will retaliate.

 

[jon_perez]

if obama tries to use tariffs then all China has to do is drop the dollar and we're screwed. no win-win situation here.

China "dropping the dollar" is equivalent to China putting a tariff on itself. If China hadn't "supported the dollar" for the past decade or so, the excesses in the US economy might not have developed to such a large extent. Warning signals would have come much sooner. China itself shares part of the blame for its holding too much US paper that may lose value. Their keeping the yuan cheap is equivalent to propping up the US dollar artificially.

Mild tariffs may be a good prescription, if it turns out China violated WTO rules. Government gets a bit of sorely needed income, local tire industry is still forced to compete.

 

[Brian4Liberty]

Get rid of all other taxes and I'll support a flat, across the board import tariff...

 

[Zippyjuan]

The Obama administration just announced a tarrif on Chinese automobile tires. China is understandably not happy. http://www.foxnews.com/politics/ele...-slams-tariffs-tires-act-trade-protectionism/

 

[hugolp]

Get rid of all other taxes and I'll support a flat, across the board import tariff...

+1

Obama is playing with fire.

 

[devil21]

Obama announced a new tariff on Chinese tires yesterday. Sounds like OP article was a setup piece.

http://finance.yahoo.com/news/Obama...tml?x=0&sec=topStories&pos=main&asset=&ccode=

WASHINGTON (AP) -- President Barack Obama on Friday slapped punitive tariffs on all car and light truck tires entering the United States from China in a decision that could anger the strategically important Asian powerhouse but placate union supporters important to his health care push at home.

Obama had until Sept. 17 -- next week -- to accept, reject or modify a U.S. International Trade Commission ruling that a rising tide of Chinese tires into the U.S. hurts American producers. A powerful union, United Steelworkers, blames the increase for the loss of thousands of American jobs.

The federal trade panel recommended a 55 percent tariff in the first year, 45 percent in the second year and 35 percent in the third year. Obama settled on slightly lower penalties -- an extra 35 percent in the first year, 30 percent in the second, and 25 percent in the third, White House press secretary Robert Gibbs said.

"The president decided to remedy the clear disruption to the U.S. tire industry based on the facts and the law in this case," Gibbs said.

By taking "this unprecedented action, the Obama administration is now at odds with its own public statements about refraining from increasing tariffs above current levels," said Vic DeIorio, executive vice president, GITI Tire (U.S.), the largest manufacturer of tires in China.

The decision comes as U.S. officials are working with the Chinese and other nations to plan an economic summit of the Group of 20 leading rich and developing nations in Pittsburgh, to be held Sept. 24-25. China will be a major presence at the meeting, and the United States will be eager to show it supports free trade.

Many of the nearly two dozen world leaders Obama is hosting have made strong statements critical of countries that protect their key industries. Obama, too, has spoken out strongly against protectionism, and other countries will view his decision on tires as a test of that stance.

Governments around the world have suggested the United States talks tough against protectionism only when its own industries are not threatened. U.S. rhetoric on free trade also has been questioned because of a "Buy American" provision in the U.S. stimulus package.

The decision could have ramifications in other high-priority areas, too.

The White House badly needs Chinese help to confront climate change, nuclear standoffs with Iran and North Korea and global economic turmoil. China is the world's third-largest economy and a veto-holding member of the United Nations Security Council.

Beijing says the duties would be a violation of global free-trade principles and has complained about U.S. protectionism.

And Roy Littlefield, executive vice president of the Tire Industry Association, which opposes the tariff, said it would not save American jobs but only cause tire manufacturers to move production to another country with less strict environmental and safety controls, less active unions and lower costs than the United States.

At the same time, Obama needs support from unions -- also a key backer of the Democratic Party in elections -- as he makes a high-stakes push for national health care legislation.

Rep. Louise M. Slaughter, D-N.Y., who chairs the House Rules Committee, said that although the 35 percent levy was less than the 55 percent recommended in July by the ITC, it was still a significant statement of administration support for organized labor.

To reach a compromise on health care, Obama may need concessions from pro-labor Democrats who support a strong stand against China.

The steelworkers union brought the original case in April, accusing China of making a recent push to unload more tires ahead of Obama's expected action. The union says more than 5,000 tire workers have lost jobs since 2004, as Chinese tire overwhelmed the U.S. market.

The U.S. trade representative's office said four tire plants closed in 2006 and 2007 and three more are closing this year. During that time, just one new plant opened. U.S. imports of Chinese tires more than tripled from 2004 to 2008 and China's market share in the U.S. went from 4.7 percent of tires purchased in 2004 to 16.7 percent in 2008, the office said.

"When China came in to the (World Trade Organization), the U.S. negotiated the ability to impose remedies in situations just like this one," 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 new tariffs, on top of an existing 4 percent tariff on all tire imports, take effect Sept. 26.

Obama's action marks a shift from the Bush administration, which was routinely criticized for being too delicate in confronting Beijing's alleged trade violations. Obama promised during his presidential campaign that he would do it differently.

For the Chinese government, the tire dispute threatens an economic relationship crucial to China's economic growth. There was speculation before the decision that new tariffs could produce public pressure on Beijing to retaliate, potentially sparking a dangerous trade war.

Soaring Chinese imports of American chicken meat already have been mentioned by Chinese state media as a possible target. Beijing also could sell some of its extensive holdings of U.S. Treasury debt, which could unsettle markets.

The decision was announced by the White House late Friday evening, a time when significant news often gets less attention because of the hour and the upcoming weekend. Administration officials had to wait until it was morning in China so that they could notify Chinese officials before publicizing the decision.

Associated Press writer Foster Klug contributed to this report.

 

[Zippyjuan]

Would an across the board tarrif be a good idea? It sounds nice- let somebody else pay taxes instead of me.

In July, we imported $135 billion worth of goods (including petroleum). Straight multiplying that times twelve months would give us $1.6 trillion worth of imports per year. Most of our trade actually comes from Canada (15.8% of total trade vs China's 14.0 although China is the largest exporter to the US with Mexico third). http://www.census.gov/foreign-trade/statistics/highlights/top/top0907cm.html
According to Wiki- the 2009 budget estimated $2.7 trillion in taxes collected http://en.wikipedia.org/wiki/2009_United_States_federal_budget
so if you wanted to replace that with tarrifs, you would have to add almost 200% to the price of every single imported item. Current customs and excise taxes collected run about $100 billion a year. That is all. Increase it to $2.7 trillion means a factor of almost 3000%.

Your $70 oil just became $200 a barrel. Tarrifs that high would certainly be met with similar tarrifs on US exports and the trade war would lead to sharp dropoffs in international trade and domestic prices of everything would soar. The drop in trade would necesitate an ever higher level of higher tarrif if you wanted to keep your tax levels the same. Loss of competition from foreign goods and skyrocketing costs for importing the stuff to make goods from here means that the price of even domestically produced goods would soar.

Price pressures would also come from the sudden massive drop in the availabilty of goods as well. No PCs. No TVs. No cell phones. No cars- they could not get all the parts to make them anymore. If you can find them, they are now quite expensive. Are you willing to pay three to five times or even more for everything? This is what you would get with an across the board tax on imports to replace all current Federal taxes. Sure your income taxes go away- increasing your available to spend income by perhaps 25% but that is more than offset by the increases in prices for everything. What items do you buy which are completely made in this country? Can you find any? It sounds nice in theory- no taxes for you but taxes on other country's exports to us. Won't hurt me, right? Wrong.

A flat, across the board tarrif to replace all taxes is not a good thing.