Obama hits China with steep tire tariffs

The White House late Friday announced it would impose high tariffs on imports of Chinese tires in a case seen as the first test of trade policy under President Barack Obama.

A 35 percent duty will be set on the tires from China for a year, followed by a 30 percent tariff for a second year and a 25 percent tariff for a third year. The tariffs come in addition to a 4 percent tariff already applied.

The petition for the tariffs was brought by the United Steelworkers union, which argued that increased imports from China had led to the closure of U.S. plants and elimination of U.S. jobs.

Labor groups had urged Obama to impose the relief, which represents the first time a “safeguard” mechanism approved by Congress in 2000 has been used. The safeguard was included in a law that provided China with more favorable trade terms when it joined the World Trade Organization. Former President George W. Bush rejected several petitions during his presidency.

Importers and several companies that manufacture tires along with the Chinese government had urged the White House not to impose the higher tariffs. Several major tire companies, including Goodyear and Firestone, import tires from China and did not support the petition from the steelworkers.

The decision is likely to be criticized by China and other international trade partners. It comes less than two weeks before Obama is to host a summit of world leaders in Pittsburgh known as the G20. At a previous G20 meeting in London earlier this year, Obama and other leaders pledged to not take protectionist measures amid the global recession.

The announcement was made in a release sent out by the White House press office at about 9:30 p.m. Friday night, a time when news is sometimes “dumped” in the hope it will attract less attention.

Obama was not quoted in the statement from White House press secretary Robert Gibbs, who said the president had decided to remedy a “clear disruption” in the U.S. tire industry.

The steelworkers petition arrived at Obama’s desk after the International Trade Commission, a quasi judicial body that considers the petitions, recommended that he provide relief. Under U.S. law, the president can accept the ITC’s recommendation or reject the petition. Obama had until Sept. 17 to make a decision.

U.S. Trade Representative Ron Kirk said that by imposing the relief, the administration was enforcing U.S. trade laws.

“When China came in to the WTO, the U.S. negotiated the ability to impose remedies in situations like this one,” he said in a statement “This administration is doing what is necessary to enforce trade agreements on behalf of American workers and manufacturers.”

Groups representing importers blasted the 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, a counsel to the American Coalition for Free Trade in Tires.

Several House Democrats who in the past had urged Bush to grant relief to groups that had sought measures to restrict imports from China hailed the move.

“The American tire industry lost more than 5,000 jobs since China flooded our market with cheap tires and stood to lose thousands more without this corrective action,” said Rep. Charles Rangel (D-N.Y.), chairman of the House Ways and Means Committee.

Rep. Sander Levin (D-Mich.) said the action was an important step in a new trade policy.