President Barack Obama took a stand on Friday night by imposing an import tax on tires imported from China. This has been an issue I have been involved with since 2004 with the “Export Tires not Jobs” campaign. And, I am proud to say that this is a step in the right direction for salvaging what is left of the US Tire Manufacturing Industry.
China may appeal the Tariff to the World Trade Organization according to the Wall Street Journal and according to the New York Times China denounced the new 3 year declining tariffs within hours of its announcement. Appeals and denouncing the tariffs are probably on the horizon as it is in China’s best interest since the USA is likely the largest importer of Chinese exports.
Tariff’s will begin September 26th at 35% for one year with 30% the second year and 25% the third in the form of an Ad Valorem tax in addition to the duties and taxes in place prior to the announcement. The Ad Valorem tax, often called VAT, will only cover tires for cars, light trucks, vans, and sport utility vehicles.
The timing of Obama’s announcement is particularly suspicious as the meeting of the top 20 economic countries, known as the Group of 20, is in 2 weeks. This will come off to many, and me, as a political move to pay back union members for their support and financing his election and will be used as a trading card in the Pittsburgh meeting. The opposition argument will be protectionism, like Daniel Ikenson of the Cato Institute, or international obligations. This bold and perhaps controversial move by the Obama Administration will be put on the chopping block for other political gain in the international politics marketplace. My early prediction is that Obama’s stand for Tire Workers is short lived or best case scenario will be scaled back.
My biased opinion is we have to take care of ourselves first. As a friend of several tire workers I have seen the impact of globalization of tire manufacturing. With plants closing, hours cut, and jobs lost the illegal flood of Chinese made tires has impacted domestic tire workers and most importantly my family and friends. If the tariff does stand it sets a precedent for other Ad Valorem tariffs to come. I hope it will be a Tariff on Steel Products particularly Tubular as it is cleaner than steel pipe made in China.