Opinion > Editorials
Obama steps toward protectionism
President Obama has chosen to placate his union backers with proposed tariffs on Chinese tires that could be the opening round of a trade war with China.
In response to pressure from the United Steelworkers, President Obama imposed tariffs ranging from 35 percent down to 25 percent over the next three years. They were lower than those recommended by the U.S. International Trade Commission that had determined imported Chinese tires hurt U.S. producers, a key finding for President Obama.
It allowed him to invoke World Trade Organization rules that permit tariffs if imports cause a disruption to U.S. businesses.
China responded with a complaint to the WTO, which starts a 60-day period for the two sides to resolve their differences through negotiations. If that fails, China can ask the WTO for a formal investigation and ruling on the fairness of the U.S. tariffs. In the meantime, it has threatened tariffs on chickens and auto products.
The issue had brought to the fore the conflict between President Obama’s opposition to protectionism that he had voiced during his campaign and his support for organized labor, which is crucial to Democrats.
President Obama will also need labor’s help in winning support for his national health care legislation.
The United Steelworkers union representing tire workers argued that more than 5,000 jobs have been lost since 2004. Chinese imports accounted for 4.7 percent of the U.S. market but have since jumped to about 17 percent last year.
However, the tire industry disputes the union arguments. The Tire Industry Association opposes the tariffs, which affect tires at the low end of prices that are more affordable to cost-conscious Americans.
The Washington Post noted that U.S. tire manufacturers have shifted toward higher priced tires while moving production of cheaper tires overseas. The tariffs will now hit American producers who have moved plants to China.
According to the Wall Street Journal, America’s two remaining domestic tire manufacturers (Goodyear Tire and Rubber Co. and Cooper Tire and Rubber Co.) had planned on increasing imports of their products made in China this year. Tariffs could also reduce supplies to replenish already low inventories.
Tire makers may now just shift production from China to other countries, but until then American consumers can expect to pay higher prices for their tires if the tariffs remain.
— Johnson News Service
In response to pressure from the United Steelworkers, President Obama imposed tariffs ranging from 35 percent down to 25 percent over the next three years. They were lower than those recommended by the U.S. International Trade Commission that had determined imported Chinese tires hurt U.S. producers, a key finding for President Obama.
It allowed him to invoke World Trade Organization rules that permit tariffs if imports cause a disruption to U.S. businesses.
China responded with a complaint to the WTO, which starts a 60-day period for the two sides to resolve their differences through negotiations. If that fails, China can ask the WTO for a formal investigation and ruling on the fairness of the U.S. tariffs. In the meantime, it has threatened tariffs on chickens and auto products.
The issue had brought to the fore the conflict between President Obama’s opposition to protectionism that he had voiced during his campaign and his support for organized labor, which is crucial to Democrats.
President Obama will also need labor’s help in winning support for his national health care legislation.
The United Steelworkers union representing tire workers argued that more than 5,000 jobs have been lost since 2004. Chinese imports accounted for 4.7 percent of the U.S. market but have since jumped to about 17 percent last year.
However, the tire industry disputes the union arguments. The Tire Industry Association opposes the tariffs, which affect tires at the low end of prices that are more affordable to cost-conscious Americans.
The Washington Post noted that U.S. tire manufacturers have shifted toward higher priced tires while moving production of cheaper tires overseas. The tariffs will now hit American producers who have moved plants to China.
According to the Wall Street Journal, America’s two remaining domestic tire manufacturers (Goodyear Tire and Rubber Co. and Cooper Tire and Rubber Co.) had planned on increasing imports of their products made in China this year. Tariffs could also reduce supplies to replenish already low inventories.
Tire makers may now just shift production from China to other countries, but until then American consumers can expect to pay higher prices for their tires if the tariffs remain.
— Johnson News Service
Copyright © 2010 - The Register Star Online