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Trade, Tires, and Jobs

Posted By Bryan Riley On January 25, 2012 @ 3:45 pm In Featured | Comments Disabled

“Over a thousand Americans are working today because we stopped a surge in Chinese tires,” asserted President Obama in his State of the Union [1] Address. President Obama referred to steep tariffs that his Administration imposed on tires imported from China.

Not everyone sees it that way. According to the Tire Industry Association [2] (TIA):

TIA believes this was a politically motivated decision that will end up costing more jobs than it saves. These tariffs will not bring back the jobs that the union claims have been lost; it will not create any new tire manufacturing jobs, and it will most likely result in the loss of thousands of retail tire industry jobs here in the U.S., affecting everyone from the shop that services your tire to the tire wholesalers—many of whom are small businesspeople struggling to stay afloat in this economy. This, all during a time when we can ill afford to be losing more U.S. jobs.

The Association pointed out [3] that there is more at stake than dollars and cents:

This tariff will price these tires out of reach of many consumers, and will lead to a tightening in the remaining supply of lower-cost tires. Also, given that the lower-cost tires imported from China help those most vulnerable in this current economy—working-class citizens—we are deeply concerned that many consumers may delay or even defer replacing their tires when necessary, thus creating a potential safety hazard on America’s roads.

A recent report [4] in The Wall Street Journal showed how the tariff affected U.S. consumers:

“This is a China tire, it costs me $69 today,” says the owner of Cybert Tire & Car Care in New York City. “Before it cost $39.” A big part of that increase: The fat tariff the U.S. has placed on Chinese tires. “It all gets passed to the customer.”

The Journal reported that production of tires affected by the U.S. tariffs primarily moved to other countries, not to the United States:

“The tariffs didn’t have any material impact on our North American business,” says Keith Price, a spokesman for Goodyear Tire & Rubber Co., echoing a sentiment expressed by some other manufacturers. “The stuff coming in from China is primarily low end. We got out of that market years [a]go.”

President Obama’s tire tariff reportedly caused China to retaliate by imposing tariffs on U.S. poultry products, threatening jobs in that industry, too. According to The Washington Post [5]:

The blow comes as poultry farmers and manufacturers say they are already feeling financially squeezed between high grain prices and the depressed American economy that has seen lost restaurant sales and lower prices for breast meat.

In his State of the Union Address, President Obama followed up his tire tariff story by calling for a brand new federal bureaucracy to investigate “unfair” foreign trade practices. In fact, the tire tariff is a cautionary tale that should remind policymakers that to the greatest extent possible, the determination of whether a particular transaction is “fair” or “unfair” should be made by the people spending the money, not by officials in Washington, D.C.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2012/01/25/trade-tires-and-jobs/

URLs in this post:

[1] State of the Union: http://www.usatoday.com/news/washington/story/2012-01-24/state-of-the-union-transcript/52780694/1

[2] Tire Industry Association: http://forms.tireindustry.org/news.asp

[3] pointed out: http://www.tireindustry.org/pdf/news_archives/pressrelease091409.pdf

[4] report: http://online.wsj.com/article/SB10001424052970204301404577171130489514146.html

[5] The Washington Post: http://www.washingtonpost.com/world/asia_pacific/us-china-embroiled-in-trade-spat-over-chicken-feet/2011/12/13/gIQASphjxO_story.html

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