New AAM Report: Import Relief from Chinese Tires is Succeeding
Initial Results Show Increased Domestic Production, Growth in Market Share and Reversal of Employment Losses
Washington, DC. The Alliance for American Manufacturing (AAM) has found that, nearly one year into President Obama’s decision to provide import relief on certain consumer tires from China, the move has succeeded in restoring production, market share and employment to the U.S. tire sector.
“Enforcing trade laws works,” said AAM Executive Director Scott Paul. “The Obama administration was absolutely right to provide three years of relief to American workers, firms and their communities that suffered injury from a flood of Chinese tires.”
In 2009, the U.S. International Trade Commission (ITC) found the statutory requirements for an affirmative decision were met under Section 421 of U.S. trade law to impose restrictions on imports of Certain Passenger Vehicle and Light Truck Tires from China. Specifically, in the period under investigation (2004-2008), imports had increased 215 percent by volume (from 14.57 million tires to 45.98 million tires) and nearly 300 percent by value (from $453 million to $1.788 billion). Simultaneously, domestic capacity declined from 226.8 million tires to 186.4 million tires, while production declined from 218.4 million tires to 160.3 million tires.
The ITC agreed there had been such a rapid increase in imports that it caused market disruption for domestic producers. President Obama subsequently imposed three years of relief with tariffs of 35 percent the first year, 30 percent the second year and 25 percent in the third year.
The study, “Obama’s Bold Economic Move on Chinese Tire Imports is Paying Off,” released today by AAM has found that, thanks to the president’s imposition of safeguard duties, production by U.S. producers has subsequently increased significantly. Looking at the first six months after imposition of relief (October 2009-March 2010) vs. the same six months in 2008-09, domestic production increased roughly 15 percent, or more than 10 million tires (based on Rubber Manufacturing Association data). Data also show domestic consumption is up.
“What we’re seeing is extremely good news for U.S. tire producers and their workers at an incredibly difficult time,” said Paul. “We know that Goodyear Tire, for example, has seen sharp increases in domestic sales volume. We commend the president for successfully fighting for American manufacturing. The last thing the administration should do is heed the calls of the outsourcing lobby and Beijing government to end the relief and cause further manufacturing job loss.”
The AAM study also concluded that because the Section 421 safeguard was used, the price discrepancy between American- and Chinese-produced tires has decreased, allowing the pricing disruption in the market to also decrease.
Adds Paul, “This is exactly what a safeguard mechanism is intended to do. And we can only hope that these findings will inspire the administration to provide a level playing field for American workers and businesses who have brought forth legitimate complaints on dumping, subsidies, import surges and other unfair trade practices.”
In 2007, AAM published an analysis, “Enforcing the Rules,” that looked at the economic benefits of enforcing U.S. trade laws across 10 different industries. A copy of that report is available by clicking here.
A full copy of AAM’s new report, “Obama’s Bold Economic Move on Chinese Tire Imports is Paying Off,” is available by clicking here.