Two U.S. congressmen are demanding the Obama administration consider tire retailers and consumers, not just tire manufacturers, in monitoring the effects of steep tariffs on Chinese tires on the U.S. economy.
In a Jan. 21 letter to U.S. Trade Representative (USTR) Ron Kirk, Reps. Dan Boren, D-Okla., and Kevin Brady, R-Texas, said the monitoring process at the very least should not only keep track of changes in U.S. tire production and manufacturing employment since the tariffs took effect, but also:
* Changes in consumer tire imports from countries other than China;
* Retail price trends in both domestic and imported tires, with special consideration to low-income areas of the U.S.;
* Changes in employment in the tire distribution and retail sectors; and
* Changes in the number of traffic accidents caused by worn-out or unsafe tires.
The congressmen's initiative was praised by the Tire Industry Association (TIA), which opposes the tariffs on Chinese passenger and truck tire imports President Obama ordered Sept. 11.
Tire dealers from around the U.S. backed TIA, providing their own testimony on how the tariffs have caused stiff price increases on tires and resulting burdens on consumers.
President Obama ordered three years of tariffs on Chinese passenger and light truck tire imports on the recommendation of the U.S. International Trade Commission (ITC), which initiated an investigation based on the petition of the United Steelworkers (USW) union.
The USW petitioned the ITC in April 2009, claiming injury under Section 421 of the Trade Act, which allows U.S. industries to request trade remedies in the face of rapidly increasing imports from China.
The tariffs amount to 35 percent the first year, 30 percent the second and 25 percent the third, in addition to the 4 percent traditionally levied on Chinese tire imports.
Passenger and light truck tire imports from China in November fell 48.3 and 63.8 percent, respectively, from November 2008the second straight month of drastic decline after the U.S. added a 35-percent tariff on the products in late September.
As a result, passenger tire imports from China through November fell 4 percent behind the 11 months of 2008 and light truck tire imports were off 23.8 percent.
Under the rules of Section 421, the administration may review any special tariff six months after its establishment. Toward that end, the administration has the authority to set up a system for comprehensive monitoring of the effects of special tariffs on various aspects of the U.S. economy.
However, this is the first Section 421 proceeding ever approved. President George W. Bush, during his two terms, vetoed four successive Section 421 relief recommendations from the ITC for various industries.
Therefore, it is important to make sure the monitoring process for the Chinese tire tariffs is comprehensive and not narrowly focused on U.S. tire manufacturing, Reps. Boren and Brady said in their joint letter.
Because no U.S. producer of tires petitioned for the relief the president has provided, the ITC and the administration should be particularly vigilant in monitoring its implementation, the congressmen said.
In addition, while we have not seen reports indicating that the tariff has created jobs, we have seen accounts of significant price increases in many areas of the country, including areas of predominantly lower income households, they said. Moreover, there is anecdotal evidence of layoffs in the tire distribution and retail sectors.
Paul Fiore, TIA director of government and business relations, and Roy Littlefield, TIA executive vice president, praised the Boren-Brady effort.
This brings some sunshine to an as-yet-unknown process, Mr. Fiore said. Because of the USW's wide-ranging claims regarding Chinese tire imports, USTR must be diligent in ensuring the monitoring system is both comprehensive and verifiable, he added.
The Chinese tire tariffs are of overriding interest to TIA members, Mr. Littlefield said. Our industry deserves a full and accurate accounting of the effects of the tariff on the entire supply chain, right down to our retailer members.
A spokeswoman for the USTR said the agency had begun the monitoring process and planned a reply to Reps. Boren and Brady. However, USTR officials could not be reached at Tire Business presstime for more in-depth comment.
Meanwhile, tire dealers around the U.S. said that while their own businesses are not yet suffering, the tariffs were causing tire prices to increase rapidlyand they feared the effect on both the tire market and on their customers.
Cooper Tire & Rubber Co. has raised its prices 17 percent since September 2009, said Jeff Atchison, president of Jeff's Auto Tire & Accessory, a Cooper dealership in Summersville, Mo.
The American people are suffering for this, Mr. Atchison said. The way they did this whole deal is wrong.
Crawford-Smith Inc. of Greenville, Texas, the oldest Goodyear dealer in the state, hasn't been helped or hurt by the tariffs, said President Keith Pope. But a Chinese-made tire that cost $80 before the tariffs now costs more than $100, while a U.S.-made tire of the same size that cost $112 before the tariffs is now in the $125-$130 range.
The customer is the one who's lost, Mr. Pope said. If the president had left well enough alone, those price hikes wouldn't have happened.
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