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2009 — A look into the past: Obama orders tariffs on Chinese tires

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(Editor's Note: This story is part of our #TireBiz30 in which we feature one archived story every day of September to celebrate Tire Business' 30th anniversary. Each story represents one of the most relevant news story published in our pages for that year. This story first appeared on tirebusiness.com on Sept. 12, 2009.)

WASHINGTON — Late on Sept. 11, President Obama issued an order imposing tariffs on passenger and light truck tires imported from China. The tariffs, issued under Section 421 of the Trade Act, will amount to 35 percent the first year, 30 percent the second year and 25 percent the third.

The tariffs are less than those recommended by the International Trade Commission, but were still greeted with dismay from the Chinese government, which in a statement said the tariffs violate both the rules of the World Trade Organization and the commitments the U.S. made to China at the most recent G-20 financial summit.

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

The ITC ruled 4-2 on June 18 to find market disruption in the U.S. tire industry caused by Chinese tire imports. The United Steelworkers sent the ITC a Section 421 petition in April, arguing that steep increases in Chinese tire imports — from just under 15 million in 2004 to over 46 million in 2008 — cost the U.S. tire industry more than 5,000 jobs during that period.

On June 29, the ITC voted to recommend a three-year set of tariffs on Chinese tires starting at 55 percent the first year, then going to 45 percent the second year and 35 percent the third.

Prominent members of the House and Senate argued with the USW for tariffs, as did a number of U.S. industries including steel, textiles, furniture and agriculture.

Opposing the tariffs were the Tire Industry Association, many of its most prominent dealer and distributor members, and tire manufacturers such as Cooper Tire & Rubber Co. and Toyo Tire U.S.A. Inc.

Chinese tire imports, they claimed, don't compete directly with the mostly premium tires made in the U.S. All tariffs would do is create shortages in the lower end of the U.S. tire market and raise prices on consumers who can ill afford price increases in a recession. Cooper and Toyo told the Office of the U.S. Trade Representative that they could no longer import tires from their factories in China, disrupting their entire distribution and marketing plans.

The Wall Street Journal condemned Obama's decision in a Sept. 12 online editorial, saying the president would be obliged to honor all Section 421 petitions from now on.

"In his first big trade test in the White House, Mr. Obama has allied himself with the protectionists, and the world will see his political surrender and rush to exploit it," the WSJ said.

The new tariffs take effect Sept. 26, the day after the next scheduled G-20 meeting concludes in Pittsburgh.

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