Wal-Mart Tires Could Force Obama Into Trade Decision On China

The U.S. International Trade Commission has made an announcement, and that announcement is one we shouldn’t be surprised by at this point. The ITC has ruled that U.S. tire companies are being harmed by cheap products from China, and as a result President Obama will have to decide whether to impose tariffs or quotas on the country that, thanks to Wal-Mart, is now America’s largest source of imports.

Of course, Wal-Mart’s tire business isn’t the only factor behind the ruling, but it certainly is one of the biggest. China sent 21 million tires to the U.S. in 2005, and that more than doubled to 46 million by last year. For its part, Modern Tire Dealer reports that Wal-Mart Stores Inc. has close to 3,200 outlets selling tires, although most of those sales are concentrated in its approximately 2,435-store Tire & Lube Service Centers nationwide.

The (United Steelworkers) union said China has more than tripled its tire exports to the U.S. between 2004 and 2008, ending jobs for 5,100 American workers. The union said another 3,000 workers would lose their jobs by the end of the year.

The next move for the ITC will be to come up with come up with recommendations on what the President should do to help U.S. companies, including a couple familiar names based in Ohio - Akron-based Goodyear Tire & Rubber Co. and Findlay-based Cooper Tire.

The case is the first test for Obama on trade with China, after he vowed during his presidential campaign last year to help unions or domestic industries seeking relief from foreign competition. Since the election, he also has pledged to avoid protectionism so as not to exacerbate the global recession.

U.S. agency rules for tire producers in China case [Bloomberg News]

U.S. agency rules for tire producers in China case
By Mark Drajem
Bloomberg News

U.S. tire companies are being harmed by products from China, a U.S. agency ruled, setting up a decision by President Barack Obama on whether to impose tariffs or quotas on America’s biggest source of imports.

The U.S. International Trade Commission ruled 4-2 that U.S. producers are being hurt by $1.7 billion in Chinese imports.

The panel will now come up with recommendations on what Obama should do to help tire makers such as Akron-based Goodyear Tire & Rubber Co. and Findlay-based Cooper Tire.

‘’Goodyear appreciates and respects the thoughtful and thorough process of the ITC and will continue to monitor the next phases of the process. As we have said, we support fair and free trade and we will abide by the president’s decision on the matter,’’ Goodyear said in a statement.

Bridgestone Firestone operations in the U.S. are owned by Bridgestone Corp. of Japan and B.F. Goodrich and Uniroyal tire production is owned by Michelin of France.

Continental AG of Germany owns the former General Tire factory in Mount Vernon, Ill.

‘’The remedies that will be delivered to President Obama will allow the time necessary to rebuild the U.S. tire industry,’’ said Leo Gerard, president of the United Steelworkers union, which filed the case on behalf of the workers it represents at U.S. tire factories.

The union said China has more than tripled its tire exports to the U.S. between 2004 and 2008, ending jobs for 5,100 American workers. The union said another 3,000 workers would lose their jobs by the end of the year.

By law, Obama has to make a decision on the so-called safeguard petition by September.

The case is the first test for Obama on trade with China, after he vowed during his presidential campaign last year to help unions or domestic industries seeking relief from foreign competition. Since the election, he also has pledged to avoid protectionism so as not to exacerbate the global recession.

The United Steelworkers want Obama to cut imports of automobile tires from China by more than half to 21 million, the level in 2005. China sent 46 million tires to the U.S. in 2008.

U.S. tire dealers and importers argue domestic tire makers such as Goodyear and Cooper have no interest in the low-cost tire market that China serves. The U.S. companies make branded tires, which are often sold to vehicle manufacturers. The Chinese imports are typically not branded and sold to consumers through low-cost outlets such as Wal-Mart, according to GITI Tire Pte Ltd., China’s largest tire producer.

GITI Tire said in testimony to the trade commission that declines in auto sales, automation of tire production and increases in raw material costs are driving the increase in Chinese imports.

‘’No matter what the ITC recommends, we do not believe that American manufacturers will increase production in the United States of low-cost tires,’’ said Vic DeIorio, executive vice president for GITI in the U.S., in an e-mail. ‘’They will still focus on premium tires.’’

U.S. tire companies are being harmed by products from China, a U.S. agency ruled, setting up a decision by President Barack Obama on whether to impose tariffs or quotas on America’s biggest source of imports.

The U.S. International Trade Commission ruled 4-2 that U.S. producers are being hurt by $1.7 billion in Chinese imports.

The panel will now come up with recommendations on what Obama should do to help tire makers such as Akron-based Goodyear Tire & Rubber Co. and Findlay-based Cooper Tire.

‘’Goodyear appreciates and respects the thoughtful and thorough process of the ITC and will continue to monitor the next phases of the process. As we have said, we support fair and free trade and we will abide by the president’s decision on the matter,’’ Goodyear said in a statement.

Bridgestone Firestone operations in the U.S. are owned by Bridgestone Corp. of Japan and B.F. Goodrich and Uniroyal tire production is owned by Michelin of France.

Continental AG of Germany owns the former General Tire factory in Mount Vernon, Ill.

‘’The remedies that will be delivered to President Obama will allow the time necessary to rebuild the U.S. tire industry,’’ said Leo Gerard, president of the United Steelworkers union, which filed the case on behalf of the workers it represents at U.S. tire factories.

The union said China has more than tripled its tire exports to the U.S. between 2004 and 2008, ending jobs for 5,100 American workers. The union said another 3,000 workers would lose their jobs by the end of the year.

By law, Obama has to make a decision on the so-called safeguard petition by September.

The case is the first test for Obama on trade with China, after he vowed during his presidential campaign last year to help unions or domestic industries seeking relief from foreign competition. Since the election, he also has pledged to avoid protectionism so as not to exacerbate the global recession.

The United Steelworkers want Obama to cut imports of automobile tires from China by more than half to 21 million, the level in 2005. China sent 46 million tires to the U.S. in 2008.

U.S. tire dealers and importers argue domestic tire makers such as Goodyear and Cooper have no interest in the low-cost tire market that China serves. The U.S. companies make branded tires, which are often sold to vehicle manufacturers. The Chinese imports are typically not branded and sold to consumers through low-cost outlets such as Wal-Mart, according to GITI Tire Pte Ltd., China’s largest tire producer.

GITI Tire said in testimony to the trade commission that declines in auto sales, automation of tire production and increases in raw material costs are driving the increase in Chinese imports.

‘’No matter what the ITC recommends, we do not believe that American manufacturers will increase production in the United States of low-cost tires,’’ said Vic DeIorio, executive vice president for GITI in the U.S., in an e-mail. ‘’They will still focus on premium tires.’’

Posted by Corey Himrod on Friday, June 19, 2009

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