Obama slaps duties on tire imports from China

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(Agencies)
Updated: 2009-09-12 11:21

WASHINGTON: US President Barack Obamaon Friday slapped steep additional duties on tire imports from China in a move that pleased domestic labor groups but will likely ratchet up trade tensions with Beijing.

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

The United Steelworkers union, which represents workers at many US tire production plants, filed a petition earlier this year asking for the protection.

It said a tripling of tire imports from China to about 46 million in 2008 from about 15 million in 2004 had cost more than 5,000 US tire worker jobs.

An additional 35 percent duty will be placed for a year on Chinese-made passenger vehicle and light truck tires, the White House said in a statement.

The new duty will take effect on Sept. 26 and comes in addition to an existing 4 percent duty. It would fall to 30 percent in the second year and 25 percent in the third year, the White House said.

Those levels are lower than the US International Trade Commission recommended earlier this year, but likely still high enough to restrict tire imports significantly from China, if not shut them out completely.

"For far too long, workers across this country have been victimized by bad trade policies and government inaction. Today, President Obama made clear that he will enforce America's trade laws and stand with American workers," United Steelworkers President Leo Gerard said.

China's Ministry of Commerce had no immediate response to the US move, which was announced on Saturday morning Beijing time, when Chinese government offices are not staffed. Shen Danyang of the ministry's news office told Reuters that officials would have to examine the decision before responding publicly.

Tires are merely the latest of many Chinese-made products to face US protective restrictions.

Beijing tends to respond to such restrictions by denouncing them and sometimes imposing apparent tit-for-tat measures on US products, without launching broader trade wars. It has also turned increasingly to the World Trade Organization to press its case.

TEST CASE FOR OBAMA

The ITC had recommended starting with a 55 percent tariff that would fall to 45 percent in year two and 35 percent in year three. The steelworkers asked initially for a quota of 21 million that would grow by 5 percent each year.

The steelworkers' request for import curbs was widely seen as a test case for Obama, who faces conflicting pressures to project jobs at home while promoting free trade.

They filed their petition under "Section 421" of US trade law, which allows the United States to restrict imports from China in response to a market-disrupting surge.

China agreed to the "safeguard" measure when it joined the World Trade Organization in 2001. Until Friday, Washington had never used it against Beijing.

Former President George W. Bush rejected four similar petitions that reached his desk and the ITC rejected two other cases before they got that far.

Obama, who faced a deadline of next Thursday to make his decision in the case, chose to announce it late on Friday.

Chinese tire producers told the Obama administration last month that even an additional single-digit tariff would shut them out of the US market because of low profit margins.

US tire wholesalers and retailers also warned a double-digit duty would cause them to cut jobs. They argued that major US tire manufacturers no longer wanted to produce the low-priced tires imported from China.

"We are certainly disheartened that the president bowed to the union and disregarded the interests of thousands of other American workers and consumers," said Marguerite Trossevin, counsel to the American Coalition for Free Trade in Tires.

No major domestic tire manufacturer publicly supported the case, but Obama faced strong pressure from labor groups that helped elect him last year to provide relief.

US House of Representatives Ways and Means Committee Chairman Charles Rangel applauded the move.

"The American tire industry lost more than 5,000 jobs since China flooded our market with cheap tires and stood to lose thousands more without this remedy," the Democrat said.