Getting the facts straight on Obama's tire tariffs.
President Obama and Governor Romney finally sparred about U.S. manufacturing and trade with China in last night's presidential debate. And, one point of contention was the president's 2009 decision to impose safeguard duties on surges of heavily subsidized tire imports from China.
While Romney opposed the effort, Obama explained that his response to the flood of tires saved 1,000 U.S. jobs.
Unfortunately, in the post-debate analysis, some incorrect assertions arose.
The New York Times' Sharon LaFraniere reported that the Administration "quietly let the tariff expire." She also cited a Peterson Institute study that estimated the safeguard "cost American consumers $1.1 billion in higher-priced tires."
The Alliance for American Manufacturing (AAM) was a strong advocate of the initial Section 421 tire case in 2009. AAM's subsequent research in 2010 demonstrated that the tariffs proved quite successful. Michelin, Goodyear, and Cooper all saw a great uptick in sales and profitability following the safeguard, with worker hours and hiring both increasing.
The Peterson Institute's assertion of “increased cost” due to the tire tariffs is inaccurate. With U.S. consumers steadily purchasing domestic brands over imported tires (thanks to the 421 enforcement), the price discrepancy between American and Chinese tires shrank. U.S. firms returned to profitability and were able to afford tighter margins and more competitive pricing.
Additionally, and as the Wall Street Journal reported, production costs and consumer demand were at the heart of any price increases: "Large increases in shipping and raw-material costs have contributed to the rise, as has recovering consumer demand in the U.S." In fact, input costs weren't impacted in any way by the tariffs.
Finally, it’s not accurate to say that the Administration “quietly let the tire tariff expire.” In actuality, the tariffs worked so well that continued relief was unnecessary. In advance of the six-month renewal request deadline, the United Steelworkers (who had filed the initial trade case) indicated to the Administration that such a request would not be made because the domestic industry had been sufficiently reinvigorated.
The tire safeguard measure succeeded precisely because it carried out the obligation of the executive branch to act when heavily subsidized imports cause grievous harm to a significant industrial sector.
Related recent Blogs
- A bad time to sideline trade talks • by mmcmullan • 12/04/2013
- Infrastructure investment means job creation • by TGarland • 12/04/2013
- China trade deficit on pace for new record, but will anyone notice? Alliance for American Manufacturing (AAM) Statement. • by scapozzola • 12/04/2013
- What to do with abandoned factories? Bring in the artists! • by LDonia • 12/03/2013
- Surprise, surprise? Americans still say job creation should be top priority • by mmcmullan • 12/03/2013
- Fmr. Transportaion Secretary Ray LaHood urges infrastructure investment • by TGarland • 12/02/2013
- The Computer Wore Heels: Check out "Top Secret Rosies" • by mmcmullan • 12/02/2013
- The Veep heads to Asia, while Michigan Democrats and automakers press the "currency issue" in TPP talks • by TGarland • 11/27/2013
- November 27, 2013: Tension over the East China Sea and more • by LDonia • 11/27/2013
- G+ Hangout postponed! • by LDonia • 11/26/2013