Tariffs—part deux?

WASHINGTON—Importers of Chinese-made passenger and light truck tires are condemning as politically motivated and anti-consumer the United Steelworkers' (USW) June 3 filing of petitions to the International Trade Commission (ITC) and Department of Commerce, requesting antidumping and countervailing duties against tires imported from China. “My reaction is that it's purely politically driven,” said Joseph Guerreri, vice president of marketing for Houston-based importer Horizon Tire Corp. “I believe that it's bad for the consumer—a de facto tax to them via the tariffs coming into our government—and will again prove to not protect U.S. jobs.” The USW, however, insists the enormous upsurge of Chinese consumer tire shipments—a doubling in just two years—necessitates new tariffs. “Unfairly priced imports of tires from China have resumed flooding the U.S. market,” said USW International President Leo W. Gerard in a press release announcing the ITC and Commerce petitions, the second time in five years the union has requested relief from Chinese imports. The USW filed the petitions under Sections 701 and 731 of the Trade Act, which govern antidumping and countervailing duties. These sections have nothing to do with Section 421, which governs petitions for relief from industries injured by upsurges in Chinese imports. Countervailing and antidumping duties are by nature more permanent than Section 421 sanctions. Whereas Section 421 relief lasts only three years before lapsing—and can be renewed only by request of the original petitioner—countervailing and antidumping duties last five years and then are automatically reviewed by the government for potential renewal. Since the Obama administration's three-year run of elevated tariffs on Chinese consumer tires ended in September 2012, imports of Chinese car and light truck tires have more than doubled, according to USW figures. “Filing trade cases is not something we take lightly,” Mr. Gerard said. “We would prefer that countries live by the rules. But when our members are injured, the Steelworkers act.” The USW's complaint hinges on jobs. In its complaints, the union cautions that if imports from China continue to grow at their present rate, they potentially would usurp as many as 10 million domestically sourced tires, or the equivalent of about one tire factory—and all the jobs that go with it. The USW represents about 20,500 workers at U.S. tire plants, or about roughly half of all tire industry manufacturing employment, according to Tire Business' analysis of available industry data. Most of the companies and organizations contacted about the USW petitions declined comment, including Michelin North America Inc. and Giti Tire (U.S.A.) Ltd., U.S. arm of Singapore-headquartered Giti Tire Co. Ltd. Bridgestone Americas and Toyo Tire U.S.A. Inc. said they were still studying the petitions. Tire Industry Association Executive Vice President Roy Littlefield said the TIA board of directors would discuss the petitions at its meeting in San Francisco the week of June 9. Goodyear said only that it was “a proponent of free and fair trade across the globe.” In April 2009, the USW petitioned the ITC for relief under Section 421, which provides relief for U.S. industries being injured by massive increases in Chinese imports. Between 2004 and 2008, Chinese passenger and light truck tire imports to the U.S. more than tripled, to more than 46 million units from less than 15 million, the union told the ITC. This upsurge translated into reductions in U.S. tire production and the layoffs of tire manufacturing workers, it claimed. Several members of Congress backed the USW's call in 2009 for relief, as did representatives of other industries, including steel, textiles, furniture and agriculture, who said their business sectors were being injured by Chinese imports. TIA and many of its most prominent dealer and distributor members opposed relief, as did tire manufacturers Cooper Tire & Rubber Co. and Toyo Tire. U.S. tire facilities don't make the kinds of tires made in China, opponents argued, and putting barriers against Chinese imports wouldn't persuade U.S. plants to start making those tires. Blocking Chinese imports would only create shortages in the low end of the new tire market, raise prices for consumers with limited incomes, and cause Asian tire makers to move production from China to nearby countries, they said. Also, job losses among tire distributors and wholesalers would offset any employment gains in tire manufacturing, they said. The ITC and the Office of the U.S. Trade Representative (USTR) found in the USW's favor. In September 2009, President Barack Obama signed an order calling for three years of elevated tariffs against Chinese tire imports—39 percent the first year, 34 percent the second and 29 percent the third. In September 2012, tariffs on Chinese tires reverted to the traditional rate of 4 percent. In its new petitions, the USW asserts that the end of the higher tariffs has been disastrous for the domestic tire industry. The petitions consist of three volumes. The first two, making the case for antidumping duties, compare China's labor and raw materials costs with those of Thailand, which the USW describes as the most directly comparable tire producing country with China. The union concluded that China's dumping margins are as high as 92 percent. Publicly available price information from tire retailers, it said, also indicates Chinese tires are priced 12 to 40 percent below comparable U.S. tires. The third volume, which asks the government for countervailing duties, identifies 41 different subsidy programs available to Chinese tire makers, including numerous export subsidies expressly forbidden by trade law. “With China no longer subject to Section 421 relief, it has once again targeted the U.S. market for its exports,” the USW said. From 24.6 million units in 2011, Chinese passenger and light truck tire shipments to the U.S. jumped to 31.5 million in 2012 and 50.8 million in 2013, the union said. “There have already been employment reductions at U.S. plants as imports from China have surged,” the USW said. “If these trends are allowed to continue, U.S. producers may lose another 10 million tire shipments to Chinese imports in 2014.” “But our historical stand has been very much against tariffs,” Mr. Littlefield told Tire Business. The USW did not include truck/bus tires in its antidumping and countervailing duty petitions. When asked why not, the union said, “The USW filed cases on passenger car and light truck tires where a past pattern of injury to the domestic industry has been established, and the current trends indicate significant harm to domestic producers and our members. “We continue to monitor all imports of tires where orders are not presently in place and, of course, will take such action as we determine appropriate to protect our members,” the USW said. The union did not estimate job losses arising from Chinese imports. That issue will be discussed at ITC hearings, it said. To reach this reporter: [email protected].