The Obama administration will impose tariffs on Chinese tire imports, following a recommendation from the International Trade Commission.
According to administration officials, Obama came to the decision believing that a surge of imports has disrupted the U.S. domestic market.
Obama signed the order on September 11 to impose the special punitive tariffs for three years, the White House announced.
The action is the first major trade enforcement action of his presidency and comes less than two weeks before a high-profile summit of the leaders of the Group of 20 nations, including China.
It is the first time the U.S. government has imposed special “safeguard” provisions to protect a U.S. industry from Chinese competition.
“The president decided to remedy the clear disruption to the U.S. tire industry based on the facts and the law in this case,” White House spokesman Robert Gibbs said in a statement.
In the first year, the tariff will be 35%, falling to 30% in the second year and 25% in the third year. The tariff would be on top of the current 4% tariff. The tariffs will take effect in 15 days.
U.S. imports of Chinese tires have risen from 14.6 million in 2004 to 46 million last year, accounting for about one-sixth of the U.S. market.
Four U.S. tire plants have closed in the past two years, and more than 5,000 workers have lost their jobs.
The United Steelworkers union had complained to the U.S. International Trade Commission about the disruption, claiming Chinese tire imports have cost 5,000 union members their jobs. The ITC had recommended a 55% tariff.
The Chinese government and some U.S. industry groups had objected to the tariffs.
“This administration is doing what is necessary to enforce trade agreements on behalf of American workers and manufacturers,” said U.S. Trade Representative Ron Kirk. “Enforcing trade laws is key to maintaining an open and free trading system.”
Kirk said China had agreed that its trading partners could impose such sanctions when it entered the World Trade Organization
Obama’s decision will prove to be a mistake, much like his Stimulus Package, as it will adversely effect tire distributors and retailers around the nation.
Consumers can expect to see increases in the cost of tires in the immediate future.
[...] Obama Decides To Impose Tariff On Chinese Tire Imports [...]