In less than a week on
September 26, 2012 the tariff on Chinese tires is scheduled to
expire. In September of 2009, the Obama Administration
implemented a steep three-year tariff on imports of Chinese-made
tires. The tire tariff was structured with a 35 percent duty
the first year, 30 percent the second and 25 percent the
third. This is in addition to the 4% base tariff. The intent
of this regulation was to protect American jobs
and save the tire manufacturing industry in the US.
But will this tariff actually expire? Will it be renewed for another year? Will the amount of the tariff be raised or lowered? These are all potential scenarios which are being considered. As we’ve discussed in recent segments, the tariff on Chinese tires has had a direct impact on the rising price of tires.
Industry analysts have questioned the success of this tariff. While it’s true that tire imports from China have declined since 2009, tire imports from several other countries are up. Large international tire manufacturers can simply shift production of their more economical tires to countries like South Korea, Indonesia, Thailand, Mexico, etc.
Bob Ulrich, Editor of Modern Tire Dealer, recently dissected a political ad endorsed by President Barack Obama which references the tire tariff. The ad boasts “when a flood of Chinese tires threatened a thousand American jobs, it was President Obama who stood up to China, and protected American workers.” Ulrich goes on to explain how facts are often disguised or taken out of context – particularly during an election year. In other words, it can be difficult to truly understand the success or failure of this tariff.
In another article, Modern Tire Dealer asked Tire Industry Association (TIA) Executive Vice President Roy Littlefield if this tariff will be dropped. “There is a presidential election” approaching, replied Dr. Littlefield. “Things are very close, the polling is very close and the president needs the support of labor. The president cited the Chinese tariff in the State of the Union address. If he needs to do something right before the election to show that he is protecting jobs and trying to work with the labor unions, he could extend the tariff for another year.”
Will it be Obama’s patriotic “duty” to extend the tariff? We should know the answer to this question soon and we will help you to understand the potential impact of the decision. As always your comments/feedback are encouraged.