Obama Levies Tariff on Cheap Chinese Tires, Saving American Jobs
By Susie Madrak Saturday Sep 12, 2009 12:00pm
I'll take this as a win, although once again Obama simply splits the difference on something that requires bold action. And this isn't just a matter of propping up an "ailing" American tire industry - Chinese tires are quite heavily subsidized, and China has been flooding the market with below-cost tires in an attempt to drive American tire companies out of business.
Still, positive news for American workers!
In one of his first major decisions on trade policy, President Obama opted Friday to impose a tariff on tires from China, a move that fulfills his campaign promise to "crack down" on imports that unfairly undermine American workers but risks angering the nation's second-largest trading partner.
The decision is intended to bolster the ailing U.S. tire industry, in which more than 5,000 jobs have been lost over the past five years as the volume of Chinese tires in the market has tripled.
It comes at a sensitive time, however. Leaders from the world's largest economies are preparing to gather in Pittsburgh in less than two weeks to discuss more cooperation amid tensions over trade.
The tire tariff will amount to 35 percent the first year, 30 percent the second and 25 percent the third.
Although a federal trade panel had recommended higher levies -- of 55, 45 and 35 percent, respectively -- the decision is considered a victory for the United Steelworkers union, which filed the trade complaint.
"The president sent the message that we expect others to live by the rules, just as we do," Leo W. Gerard, president of the union, said Friday night.
China's government and its tire manufacturers, as well as tire importers and some U.S. tire makers with plants overseas, had strenuously objected to the measure.
"The President decided to remedy the clear disruption to the U.S. tire industry based on the facts and the law in this case," the White House said in a statement released Friday night.
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Saving American Jobs is what will save the American Middle Class.
Multi-national corporations have no allegiance to America. They only have allegiance to shareholders and the profit margin.
...how tough China will respond to this.
The smart money would be on "they won't do shit".
With all the manufacturing advantages China has, cheating is pretty despicable.
the recent Chinese decision that they would not require state-owned companies to honor certain financial products (derivatives) positions if they believed there was fraud in how they were sold to the Chinese probably had some clout.
And my wife and kids know not to go near the bowl when they eat, I can,,, but that is another story.
..."Why The Free Market Just Doesn't Work" 101...
I say good! Import tariffs all around! In the long-run it's a win-win for all involved.
Subsidies and tariffs can't exist in free markets because "governments" can't exist in free markets.
is a free market. China charges huge tariffs on our products.
was it?
sure that Captainapathy was trying to infer that a free market doesn't work because industry can be subsidized by government.
...when applied, specifically internationally, the conceit of the "free market" will only lead to monopoly and one-way wealth transfers - in this case, upwards. I'm saying that, stability being the order of the day, governments, specifically between differing economic models, must intercede, and that such involvement leads to greater economic success over the long-term for both parties.
In short, unregulated "free market" bad, reasonable international tarriffs (especially if we mean to keep any production [read:jobs] stateside) - good.
Good first step, now howzabout we tax any company that sends tire jobs off-shore? Or better yet, any job off-shore. Limiting H1B visas would also be a fine step towards bringing jobs back into the country.
bottleneck the imports coming into the country, Sure,,, supply would go down,,, but demand would go up at first. the corp bean counters would say start factories in the USA to keep the penny toys going,,, putting people back to work. I work in the car dealer business(was one of the Chrysler dealers who got the axe). Folks,,, Michelin, Goodyear, and Firestone have worthy no names to sell you tires. Many at $$$$ to be saved
but I doubt if it will save lives. The Chinese may, in fact be targeting particular US industries in the way you suggest. Other countries have certainly done so including the US.
Dumping: When one country exports a significant amount of goods to another country at prices much lower than in the domestic market.
I thought this was illegal in the first place - could be wrong.
I live in Florida and there have been a couple of 'dumping' issues reported in the last few years. One with Brazil about orange juice and one with several countries about shrimp.
It's about time that a POTUS sticks it to the Chinese, even if it's only a little bit.
This is about the first thing that he's done that I'm glad for. Now, let's go for all the other businesses that export our jobs.
... and in this case, his admin is doing the right thing. Bravo.
Don't click this link if you don't want to be revolted
http://blogs.abcnews.com/.a/6a00d8341c4df253e...
"Chinese tires are quite heavily subsidized, and China has been flooding the market with below-cost tires in an attempt to drive American tire companies out of business."
As someone involved in this case I can assure you there was no evidence of subsidization or below-cost sales as these are not required under this safeguard law.
The truth is the union brought the case and the administration granted relief for political reasons. US tire companies will not reopen their economy tire plants just because of a temporary duty. Cheap tires now will come from Korea, Mexico, and other countries while customers here will have to pay more to replace balding (and dangerous) tires.
Does that mean that they were subsidizing but we couldn't prove beyond a shadow of doubt or they were dumping but it couldn't be proved? What is your connection to the case?
Dumping and subsidization are irrelevant under this safeguard law, which applies only to China. The issues are (1) are imports increasing and (2) are they injuring a US industry. In other words, the law protects against legitimate competition from imports.
http://en.wikipedia.org/wiki/Safeguard
Did you have a vested interest?
You aren't offering any evidence that the Chinese weren't dumping, only stating that evidence isn't needed in order for the President to exercise this right under the Safeguard?
Not a very strong argument.
Could you provide a link or any additional info into the Union bringing this action, and why?
I was involved yes, and not on the union side obviously. My point is this was not a dumping or subsidization case so it didn't have to be proved or disproved. The law is designed to restrict fair (meaning not dumped and not unfairly subsidized) trade.
The admin basically had to grant the relief for political reasons given where they are on healthcare and other issues, they just cant afford to lose the unions right now. The steelworkers union brought the case because a trade war with china would be just fine with them.
And we should just accept that as fact because you say so?
Sorry, but "The admin basically had to grant the relief for political reasons given where they are on healthcare and other issues, they just cant afford to lose the unions right now." sounds a lot like knee-jerk GOPer opinion.
If you really were 'involved' you should be able to offer some supporting evidence that the Chinese weren't bending or breaking any rules. Stating that the law doesn't require evidence doesn't mean there wasn't any.
Plus, being 'involved' I'd have thought you'd have a better source than wikipedia. JMO.
He's right, that this is a safeguard to protect domestic interests. Political? Maybe. Legal? Definitely. The WTO rules allow this sort of action.
As for, "[c]heap tires now will come from Korea, Mexico, and other countries while customers here will have to pay more to replace balding (and dangerous) tires...," yeah, possibly, and more safeguards may be implemented to protect US jobs from those countries.
Here's the thing, tireguy: Americans without income can't really afford tires, no matter how cheap the tires. To paraphrase Robert Zimmerman: When you ain't got nothin', you ain't got nothin' to spend.
because they are getting shafted by AMERICAN companies.
Thanks for the info Michelle. I didn't think the rubber industry was that cut and dry.
The U.S. International Trade Commission thought something was hinkey, but the Chinese think they're getting shafted by the mean ol' Americans.
What a shock.
I'd still like some evidence one way or the other, instead of just words, words, words.
Not that I'm against protecting American jobs in general, I'd just like to know what specifics led to the decision.
Probably some shenanigans going on behind the scenes. there usually are.
If the US was serious about protecting jobs, we would not import anything that could not be made or produced here, at any price. period. But who is willing to go that far and what are the consequences?
for $735.00 made in Milpitas, California.
It looks like a lot of green but if produced here, the batteries and memory should be made accessible to consumers of the US version - not like the present day Chinese version sealed in a Chinese jig that only Apple and other service facilities have tools to access the internals with.
I keep imagining an Apple product that's upgradeable, not the same old replace with new serial number method.
Yes. A good example of how American capitalism has broken the fun meter and is sucking much more money out of consumers than their fair share.
I'd like to stick with my local merchants as much as possible but the truth is, some of them suck at what they are doing.
they're on the suck end because of credit/cash problems. What are the specifics?
have any links? Cuz, of course I always believe what I'm told and what I read.
The race to the bottom is in full swing.
A serious question; is the use of the word troll considered a personal attack? If so, I'll refrain.
[Yeah. We are trying to stop that, because it stifles the exchange, and you know when they are really egregious, we'll call it and get them. It just turns the thread into "Am not!" "Are so!" off topic flame fights-Sitemonitor]
Amato's Law?
"Chinese tires are quite heavily subsidized, and China has been flooding the market with below-cost tires in an attempt to drive American tire companies out of business."
As someone involved in this case I can assure you there was no evidence of subsidization or below-cost sales as these are not required under this safeguard law.
Sorry but your argument is irrelevant, If Cheaply made Chinese tires can undercut and hurt the sales of American companies, whether they are dumping or not makes no difference. Import tariffs are designed to level the playing field so competition is maintained and American industries protected.
The truth is the union brought the case and the administration granted relief for political reasons.
Whatever!
US tire companies will not reopen their economy tire plants just because of a temporary duty. Cheap tires now will come from Korea, Mexico, and other countries...
You are absolutely right lets make them permanent! We can level tariffs on the other countries also.
while customers here will have to pay more to replace balding (and dangerous) tires.
Wrong again, Products are priced based on what the market will pay. Not on the cost of manufacture.
Get your facts straight, and stop trying to mislead people.
"Chinese tires are quite heavily subsidized, and China has been flooding the market with below-cost tires in an attempt to drive American tire companies out of business."
As someone involved in this case I can assure you there was no evidence of subsidization or below-cost sales as these are not required under this safeguard law.
Sorry but your argument is irrelevant,
It should be obvious from the above that I was correcting a factual statement in the original post. Just because you don't personally care about the point doesn't make it irrelevant.
The rest of your comments show that you have no understanding of trade law or economics and I am not here to fix that problem.
We're still waiting for you to back-up your statements with some evidence other than your own words.
Maybe you could wiki us some more 'proof'.
Here's the page for the ITC's investigation: http://www.usitc.gov/trade_remedy/731_ad_701_...
The ITC's determination is linked as a pdf. You're welcome to read that and let me know if you see a single mention of dumping or subsidization. I can tell you now that you won't because these issues are completely irrelevant under the safeguard law, which is my primary point.
On my second point, it's simple common sense that if Chinese tires were "winning" just because they are cheaper, then the next best choice will not be US tires, it will be the next cheapest tires from other low-cost countries like Korea and Mexico. Does that really not make sense to you?
It would depend on whether the Mexicans and Koreans have the capacity and the efficiency to replace the newer Chinese factories and lower Chinese wages.
It's hardly a given.
And yes, I will try to read your link, if I can make it out, since it didn't post properly.
http://www.usitc.gov/trade_remedy/731_ad_701_...
You can also read the hearing transcript in which one executive after another from US tire dealers testifies that after China their next options are Korea and Mexico, among other countries.
So I browsed the documents, and the USITC found that the domestic industry was being harmed under section 201. So, in order to protect the domestic industry's 'low end' tire production until such time as trade adjustment assistance is available to the domestic workers who will inevitably lose their jobs, and modernization and consolidation of some domestic production assets is complete, this action was taken.
So this action was taken for those reasons only, and not due to 'dumping' per se.
Now that we've established the basic facts of the ruling, perhaps you'd like to enlighten us on just how you know that the President took the action recommended by the USITC not because it was deemed necessary, but because as you said:
"The admin basically had to grant the relief for political reasons given where they are on healthcare and other issues, they just cant afford to lose the unions right now"
Sounds like supposition to me.
Besides, this is exactly the kind of thing the President said he was going to do if elected, ie, protect American workers from American companies that move their jobs offshore. It's hardly a recent development based on a sudden need to garner support from the Unions. He already had support from the Unions.
As for your comment that CEO's from the tire companies said at the hearing they would take their business to Mexico and/or Korea; I don't put too much faith in the threatening words of liars in suits. It's called fear mongering. These guys know they are just as, or perhaps even more liable to face tariffs if they move production.
Well I am glad you see the decision was not based on "dumping per se" as that was the point of my comments in the first place. That means the US govt is preventing "fair" as opposed to "dumped" competition.
As to my second point, you are free to decide for yourself why the administration would block free trade when a union requests it. Maybe they decided jobs really would be protected. But if cheap tires will continue to flow from other countries it's hard to see how that would happen.
Please understand I am a committed liberal and democrat and a regular reader of Crooks and Liars. I am just suggesting that a win by a union on a trade issue like this should not be automatically assumed to be a positive, and maybe there is more going on here than meets the eye. My hope is that readers of this blog are able to think more critically than that about complex issues like this. I hope that is what distinguishes us from the teabaggers and dittoheads on the right. But maybe I'm wrong.
All of your arguments are ignoring the fact that the majority of companies in question are AMERICAN.
To my mind, this is just another example of corporate America screwing the world, and China is busy protecting is shareholder status.
"The rest of your comments show that you have no understanding of trade law or economics and I am not here to fix that problem"
Actually I do understand. It is you who chooses either because of self interest or because you have been duped to try to defend the undefensible.
First of all Trade laws are in place primarily to protect the American Worker from unfair competition from low wage workers in other countries.
Ever since Reagan gutted the trade policies which had been protecting American workers since the founding of this country The American worker has been losing out to competition from low wage countries around the world. Corporations have taken advantage of this to increase their profits by importing cheap goods from overseas and selling them at higher markups to the American consumer.
Regarding my point about retail costs having nothing to do with the cost of manufacture. Either you really are a dupe or you are lying. Manufacturers spend considerable time and money to determine what a product can be sold for. The manufacturing costs are irrelevant to the retail price. In fact any manufacturer would be insane to base the retail price on the cost of manufacture when people would be willing to pay more for the item.
You are arguing for continuing a system which has been destroying the American economy and the Middle Class for the past 30 years. It is way past time for reform of the trade laws in this Country. China, Japan and most all the other Countries we trade with protect their domestic markets it is time we started protecting ours again too.
Fair trade laws exist to protect all Americans, including consumers, not just the American worker. If you have ever purchased a single item manufactured outside the United States then you must understand this very basic point.
You are absolutely correct that sellers price their products based upon what buyers are willing to pay. In most cases that depends primarily upon what is the next cheapest option. In this case, the next cheapest option is not US tires. It will be tires from other low-cost countries. Why in the world would Goodyear make a tire in the US for $70 when it can make the same tire in Mexico for $50 and sell it here for a bigger profit?
Believe me I would love for every American worker to keep his or her job and for us all to live in a paradise of zero unemployment. But this safeguard law applies only to China, we can't apply it to other countries. So please tell me how exactly you think this decision is going to help a single American worker if cheap tires will continue to be imported from other countries?
Yes.
Obama risks angering the nation's second-largest trading partner.
Who gives a shit!....Screw China ..... It's about time we started practicing a little protectionism here in America like the rest of the countries we trade with already do! What's wrong with protecting our turf and our jobs?
The trade laws in this country SUCK! They are designed to help multi national corporations make their products in economically under developed countries where they abuse the people by giving them a less than living wage. they also abuse the natural resources of those countries because they have few laws protecting their workers or their environment. They then bring the products back here to sell them to us with no tariffs or penalties for helping ship out our jobs and ruin our economy in the process.
The so called balance of trade between our countries doesn't exist. It's a one way street into our country from China all brought to you by the WTO, A conglomerate of mostly American corporate interests. I hope they get pissed off and stop selling us their Cheap slave labor shit! Maybe poor Wally Mart will have to start looking for products made elsewhere.......Like right here in America!
Who would have thought that tires made with slave labor would be cheaper than tires made by free men and women.
We're really doing something humanitarian by letting the Chinese dump on us, because that'll increase the income of the Chinese worker by .05 yuan a day.
See, I really do pay attention to the free-market GOPers when they talk. ;)
Although there are sweat shops and lousy working conditions, one reason why labor is so cheap is they have a work pool of over 700 Million people for christ sake. If you can fix that maybe they can start paying their people 12 bucks an hour too.
Here is the Chinese response:
ﮡﮜﭻﭚﭝ ﭦﮨﭙﭿﯠﮢﯦ ﮕﭳﮎ ﭛﮱﭿ ﮝﮉ ﭸﮆﮩﮚﭫ ﮏﭡﮃﮣﮭﮋﭻ
crybaby.
You must have run it through the translator cause I wasn't sure what it said.
It's Arabic or Farsi. But I can't get it translated. I think it says nothing at all...:(
sorry miss kitty. I'll work on my farsi a little more.
I made it up just like I figured you did.
near a bunch of tires that don't say Good Year Metro Miler on them - UnAmerican.
I can't help but wonder anymore, with Obama and other Democrats STILL trying to work with Republicans who have made it clear, they don't want to work with them, and now taking the middle ground here - is Obama more worried about getting the most people to like him rather than what's right? Is he worried about all the nuts in the country who are going right up to the line of threatening him physically but not crossing it?
It's sad to see him give great speeches and ideas throughout the year last year, and then back off them now to try to appease the Ayn Rand, "capitalism will solve everything" crowd. I'm sure one of them, somewhere, will decree this small move even as "Obama going to far with his 'socialist' agenda".
for years to come sounds like someone speaking for an administration that is not seriously interested in or can't seem to fathom the concept of ONSHORING JOBS BACK TO THE US.
As long as car production goes down,,,which it will,,,, so will the needs of tires. As far as going to give the rubber companies a boost,,,, then we should give tax dollars to the cartwrights and blacksmiths as the advent of the automobile put them out of business.
"Chinese tires are quite heavily subsidized, and China has been flooding the market with below-cost tires in an attempt to drive American tire companies out of business."
Susie, whether you approve of this decision or not I am afraid your quoted statement above is completely unsubstantiated. The president's decision is intended to restrict "fairly" traded imports. Both unfair subsidization and dumping (selling below cost or home-market price) were completely irrelevant to the decision, please see my comments above. I am wondering whether you will either explain your basis for making the statement or retract it?
GATT treaties WORKED... The treaties that we have insisting on free trade just means to allow Corporations to ship or threaten to ship jobs away from North America.
We should re-institute the tariffs and solve our economic problems by stopping the flow of money to china and other countries.
Buy our own products etc... Makes sense to me.
We are all so against these products. For good reason?, perhaps, probably, yes. Are all their products suspect? We don't really know do we? I wouldn't want my animals to eat anything that comes from there, as we know they don't have any control or quality standards that can't be relaxed with a few yuan.
But do they make anything? Hell yes, all our cheap electronics. Japan farmed out their products years ago to the cheap labor market. Are they made without regard to the environment? Hell yes, that is why the Japanese had them make them, that's why we do, or any other country. It is a sludge pit.
But let's be fair, is there anything they make in China that qualifies as a unique product, or one that isn't made better in other countries that do care about the manufacturing process and the environment?
You would think we could find out, but I wonder?
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