US slaps punitive tariffs on Chinese tires

September 12, 2009

, WASHINGTON, Sept 12 – US President Barack Obama on Friday imposed punitive duties of 35 percent on Chinese-made tires, igniting the first trade spat of his presidency just weeks before hosting his Chinese counterpart Hu Jintao.

The president "signed a determination to apply an increased duty to all imports of passenger vehicle and light truck tires from China for a period of three years," the White House said in a statement.

The decision was taken "in order to remedy a market disruption caused by a surge in tire imports," the statement said.

The Chinese government said it "reserves the right to retaliate" over the US decision.

Obama has come under fierce pressure to introduce punitive tariffs on tire imports, amid warnings that a surge in the Chinese-made goods had cost more than 5,000 jobs in the United States.

But in a bid to assuage Beijing\’s inevitable anger over the move, the president stopped well short of the rates recommended by the government-run US International Trade Commission (USITC).

His decision comes ahead of the G20 summit in the US city of Pittsburgh on September 24-25, when he will host President Hu.

In addition to existing duties of four percent, tariffs will soar by a further 35 percent in the first year, 30 percent in the second and 25 percent in the third.

The quasi-judicial USITC had proposed tariffs of up to 55 percent on Chinese passenger and light truck tires, based on a petition led by the United Steelworkers Union that said tire imports had tripled since 2004, forcing plant shutdowns and the loss of 5,100 jobs.

The office of the US Trade Representative held a public hearing on the proposal and submitted its recommendation to Obama last week.

Beijing could now retaliate against US exports at a time when the world\’s largest economy is beginning to recover from a brutal recession.

The United Steelworkers union, which lobbied heavily for the tariffs, applauded Obama\’s move.

"For far too long, workers across this country have been victimized by bad trade policies and government inaction." USW International President Leo Gerard said in a statement. "The president sent the message that we expect others to live by the rules, just as we do."

But the American Coalition for Free Trade in Tires, a pro-business group, expressed disappointment in Obama\’s decision.

"We are certainly disheartened that the president bowed to the union and disregarded the interests of the thousands of other American workers and consumers," said Marguerite Trossevin, legal counsel to the coalition.

Earlier, the group cited an expert study showing the American economy would shed 25,000 jobs, mostly in the tire distribution and retail sectors.

The United States has been grappling with a ballooning trade deficit with China amid long-standing allegations that Beijing has been manipulating its currency to make its exports more competitive.

Obama entered the White House in January after campaigning for a robust trade policy with China.

His administration has prodded China, now the third-largest buyer of US exports, to act swiftly on market reforms, saying American producers needed enhanced market access now to save and create jobs at home.

The US ambassador to Beijing announced last month that Obama would make his first presidential visit to China in the middle of November.

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