Job Losses at Issue in China Tire Tariff Debate

Aug. 20, 2009
Industry representatives say duties could cause even more losses, while union leaders say China is dumping cheap imports and taking jobs with them

Labor groups and tire industry representatives are at odds over the U.S. International Trade Commission's recommendation to place high import duties on Chinese-made tires, a move that prompted China's Vice Chairman of Commerce Zhong Shan to visit Washington this week to lobby against the proposed tariffs.

The commission voted on June 18 in favor of the United Steelworkers' petition for import relief duties of up to 55% on Chinese passenger and light-truck tires. The commission, an independent federal agency that provides trade policy advice, recommended three years of duties on Chinese tires -- 35% in the first year, 45% in the second year and 55% in the third year -- under section 421 of the Trade Act.

The pro-labor Alliance for American Manufacturing (AAM) issued a statement Aug. 19 amid Zhong's visit, saying 3,000 more tire workers could lose their jobs in addition to the 5,100 lost since 2000 if action is not taken.

But groups representing tire dealers, distributors and manufacturers say tariffs will raise consumer prices and won't bring jobs back to the United States.

"The manufacturers have shut down plants and shipped things overseas, and they're not going to bring back manufacturing back here because they move tires around from country to country, and they're looking for places where they can be more competitive," said Roy Littlefield, executive director for the Tire Industry Association, an international group representing more than 6,000 members in manufacturing, sales and repair.

Even with tariffs, manufacturers would simply move jobs to other lower-cost labor markets, such as India or Brazil, Littlefield says. Other critics of the commission's ruling have said the action could cause up to 25,000 job losses.

But AAM Senior Analyst Kerri Toloczko said that's not the case.

"I'm not sure how manufacturing a product domestically causes domestic job loss," Toloczko said in a statement. "And it's not just the numbers. Deaths and injuries have occurred here because Chinese manufacturers purposely omitted a gum strip that keeps treads together simply because it saved money."

Littlefield argued that tires entering the United States have to pass the same industry standards as tires produced domestically. The main problem is counterfeit or look-alike tires being passed off as name brands.

"That's a huge issue. It's a liability issue, insurance issue, safety issue," Littlefield said.
The Tire Industry Association is working with dealers and manufacturers to help them identify counterfeit tires, he said.

The United Steelworkers have said tire safety and job losses are symptoms of a larger issue. The union claimed China has violated section 421, which is intended to protect the United States against Chinese import surges that cause market disruptions. China agreed to the amendment in 1999 as a condition of its accession to the World Trade Organization.

The union would have preferred a quota on Chinese tire imports but United Steelworkers representatives said the tariffs should provide some relief. Since initially filing the petition for dumping remedies, tire imports from China have increased 37%, according to Gary Hubbard, a spokesman for the United Steelworkers.

"They're trying to get extra product in the door," he said. "They seem to know the president is going to provide relief, and it will not only stem the loss of the 8,000 jobs so far, but the three-year period will likely allow breathing space for domestic tire companies to get production going again."

The office of the U.S. Trade Representative will submit a recommendation based on the commission report to President Obama by Sept. 2. The president is required to make a decision within 15 days of receiving the report.

If Obama rejects the proposal he could disappoint unions and some Democratic party leaders. But if he approves the plan, it could spark the first major trade dispute in his presidency.

--Agence France-Presse contributed to this report

About the Author

Jonathan Katz | Former Managing Editor

Former Managing Editor Jon Katz covered leadership and strategy, tackling subjects such as lean manufacturing leadership, strategy development and deployment, corporate culture, corporate social responsibility, and growth strategies. As well, he provided news and analysis of successful companies in the chemical and energy industries, including oil and gas, renewable and alternative.

Jon worked as an intern for IndustryWeek before serving as a reporter for The Morning Journal and then as an associate editor for Penton Media’s Supply Chain Technology News.

Jon received his bachelor’s degree in Journalism from Kent State University and is a die-hard Cleveland sports fan.

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