September 12, 2009 in Nation/World

Tariff set on tires from China

Obama sides with labor union; importers upset over move
Peter Whoriskey And Anne Kornblut Washington Post
 
Associated Press photo

A Chinese worker moves tires on an assembly line in Beijing, China, on Friday.
(Full-size photo)

WASHINGTON – In one of his first major decisions on trade policy, President Obama opted Friday to impose a tariff on tires imported from China, a move that 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.

But it threatens to upset the strategically important relationship between the United States and China and comes on the eve of the Group of 20 summit in Pittsburgh, where world leaders are expected to discuss cooperation on trade issues.

The tariff will amount to 35 percent the first year, 30 percent the second and 25 percent the third.

While a federal trade panel had recommended even higher levies – of 55, 45 and 35 percent, respectively – the decision is considered a victory for the United Steelworkers union, which had filed the trade complaint.

“The president sent the message that we expect others to live by the rules, just as we do,” Leo 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 manufacturers with plants overseas, had strenuously objected to the measure.

Obama’s decision signals a marked shift from the policy of the Bush administration, which had rejected taking action in each of four similar cases it reviewed.

Congress passed legislation in 2000 that allows the United States to impose tariffs and other trade protections if a surge in Chinese imports damages a U.S. industry.

China agreed to the provision while negotiating to join the World Trade Organization, but until Friday the general “safeguard” provisions of the law had never been invoked. The tire tariff takes effect Sept. 26.

Marguerite Trossevin, who represents a coalition of U.S. tire companies that import Chinese tires, said the tariff decision is “very disappointing.”

She predicted price increases for U.S. consumers and losses for U.S. tire importers.

A spokesman for China on trade issues could not be reached Friday night.


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