The Obama Administration Imposes Stiff Tariffs on Imported Chinese Tires

Travis's picture

The Obama administration will impose stiff tariffs on imports of Chinese-made tires after finding that a surge of imports has disrupted the U.S. domestic market.

(Wow, you really think Chinese imports have disrupted the U.S. domestic market?)

President Barack Obama signed an order on Friday to impose the special punitive tariffs for three years.  This action is the first major trade enforcement action of his administration and comes less than two weeks before the high-profile summit of the leaders of the "Group of 20" nations, including China.

This is the first time the U.S. government has imposed a special "safeguard" provision to protect a U.S. industry from Chinese competition.

"The president decided to remedy the clear disruption to the U.S. tire industry based on the facts and the law in this case," notes White House spokesman Robert Gibbs said in a statement.

Taking effect in fifteen days, the tariff will be 35% in its first year, falling to 30% in the second year and 25% in the third. These tariffs will be on top of the current 4% tariff.

U.S. imports of Chinese tires have risen, almost tripled, from 14.6 million in 2004 to 46 million last year; about one-sixth of the U.S. market. Four U.S. tire plants have closed in the past two years alone, and more than 5,000 domestic workers have lost their jobs.

The United Steelworkers Union had complained to the U.S. International Trade Commission about the disruption. The ITC had originally recommended a stiffer 55% tariff for the first year, 45% the second and 35% the third.  And of course, the Chinese government objected to the tariffs entirely.

China claims these duties would be a violation of global free-trade principles and a clear sign of U.S. protectionism, a topic Obama too has spoken-out strongly against.

"This administration is doing what is necessary to enforce trade agreements on behalf of American workers and manufacturers," says U.S. Trade Representative Ron Kirk.  Further, "Enforcing trade laws is key to maintaining an open and free trading system."

Kirk also notes that China had agreed its trading partners could impose such sanctions when it entered the World Trade Organization.

Ponder and discuss.  This could get interesting.  Obama needs to placate the domestic labor unions for his reformed healthcare agenda, yet needs China's support, notably in nuclear standoffs with Iran and North Korea.  Lest we not forget, China is the world's third largest economy and a veto-holding member of the UN Security Council.  Oh, and what about the massive amounts of U.S. Treasury debt China currently holds?

Personally, I see the makings of a trade war, among other things.  With much at stake.  Trade aside. 

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mattco's picture

Had to get support from the unions for his healthcare bill....

Change you Can believe in..... lol

Anonymous's picture

Confucious say: Don't bite the hand that feeds you!
China doesn't buy treasuries = World of some point they'll play their hand..........

Lets_Eat_Amen's picture

in the phillipines they say:  "if I owe you one dollar, you're my master.  If I owe you a million dollars, i'm your master."  Of course, this neglects to include the continuation of borrowing but an interesting note all the same.

Anonymous's picture

"This could get interesting"

I like to think that by this you mean "this could escalate."

ZerOhead's picture

Into a War on trade perhaps?

That'll go well with the current War on Terror, War on Drugs, War on Poverty, War on Reason...

MinnesotaNice's picture

Can we have czar's with each of those wars please... preferably a czar who can quietly make a tidy profit on the side...

Gubbmint Cheese's picture

I'm sure there will be no hard feelings come auction time.... right?

Nothing personal China..


SteveNYC's picture

Don't worry, we have Heli-Ben and his merry men. I now fully believe that the administration and the Fed believe they can fund every cent of treasury debt that the US needs, simply via QE and open market purchases.

These guys need to be stopped.

Marge N Call's picture


My thoughts exactly. Things never change.

ZerOhead's picture

'At first things seemed to go well... then GDP collapsed by 50%'

ha ha ha... ha ho ho... ho oh ho... oh ho oh... no oh no... oooh no no no...

We're dead.

Hephasteus's picture

Partial success. It's vital part of failure.

SilverIsKing's picture

Could anyone really be this stupid or is this the catalyst for blaming the Chinese for tanking the dollar?

Anonymous's picture

Could possibly be the first intentional step towards
a full trade war. I guess the PTB has made no bones
about his intention to protect domestic blue collar
workforce. A very dangerous step indeed could easily
escalate and take the cost of living sky high.

The sick thing is that we want free trade when it
benefits us and no when it does not...and the PTB
go on and advise other countries to bring down trade

I am thinking this could possibly be intentionally
done to repudiate our debt and bring manufacturing
eventually back to america.

Mediocritas's picture

Oh they really are this stupid. Again, the power of lobbyists shine through.

Nice one fellas, real nice. Piss China off when it has the you over a barrel...yeah, real clever.

Cheeky Bastard's picture

DXY - 65.xx on Monday

Anonymous's picture

I pray you're right. Shorted the dollar to the max that my shrivelling soul will allow.

Sam Clemons's picture

Yep, this stuff never works for the long run.  A black market import of Chinese tires will develop.  Because of the US tire makers now reliance on the govt to make them competitive their product quality will deteriorate while prices rise.  Why don't these moronic unions focus on making better tires for a cheaper price instead of relying on the looter US govt?  Now, we've directly hurt the people who facilitate our looting ways. 

Hephasteus's picture

They made better tires. Don't you remember firestones blowing out and causing SUV's to roll. That's better.

ZerOhead's picture

Resulting in fewer new SUV sales... that's worse...

straightershooter's picture

Once again, who got hurt in this case? Those poor guys who had just become NINJA and who need ultra cheap, no name brand tires in order to make that all-vital job interviews. Congratulations! Unions. Once again, unions have successfully raided the poor guys by forcing them to buy higher price, union made tires, now that the tires unions don't make, but made by poor chinese workers are as expensive as those made by unions.

It is foreseeable that some NINJA will be forced to keep driving the dangerous tires and keep risking their lives on the road, thanks to the unions for padding their  own pockets.

As for poor chinese, they may not do anything in return at this moment. But return it will. Remember, Chinese are famous for their patience. It is never too late to take revenge even if it takes a 1000 year wait.

By the way, how do you hurt the no brand low price tire market which the US tire companies abandoned long time ago.

E pluribus unum's picture

Since when are there job interviews?

straightershooter's picture


This is fast.  Heard from the chat that China will retaliate by blocking all US made tires from entering China.

Trade War, Trade war.......DXY 40?????

Cheeky Bastard's picture

lol, in a year you will hear stories starting with a sentence like this : " Remember when the DXY was 22 ... " 

straightershooter's picture

I just found out that China sent #2 or maybe #3 leader to meet and warn Obama not to take trade protective measures. Now, obviously, China loses face and will react harshly to let Obama know that he barked the wrong tree.

Brace for the impact. Though TD said Bernanke would not be satisfied until DXY hits the headquarter of zerohedge.

OK, I hear your 22 bid. Anyone going for 20?



ZerOhead's picture

Part of the North American monetary union plan Cheeky. U.S. dollar = Mex peso = Union.

Thought you were up on this shit.

Seriously though the dollar has to fall if the country is going to become competitive again. Unfortunately this will have inflationary effects... and when combined with the accelerating Q.E. if they can't get the budget under control... plus the effect of rising interest rates on the residential commercial and industrial sectors... Crash2.0 and Bailout2.0... Crash3.0 and Bailout3.0...

Where is the bottom going to be? That's all I want to know. (rhetorical)

Anonymous's picture

a few days ago chinese steel pipe tariffs were hiked !
Now its tires!!
also illegals may not be able to purchase health insurance (new plans)!

Anonymous's picture

YEAH, the last part of crisis will turn into DOG eats DOG and new de-leveraged normal spending habits of US consumer. The slogan will be: Don't buy if you don't have money. FOr reference see SNL - "don't buy if you don't have money."

FED will give up and let the credit supply to go back to equilibrium. GOV will gently break down financial institutions into the smaller compartments, and over saving rate will remain positive.
Otherwise the government will over- stretch itself and break down, witch will cause new political parties to gain power and maybe re-write constitution a bit, still we will remain somewhat of a democracy with relatively well defined bill of rights.

Comrade de Chaos's picture

YEAH, the last part of crisis will turn into DOG eats DOG trade disputes and new de-leveraged normal spending habits of US consumer. The slogan will be: Don't buy if you don't have money. FOr reference see SNL - "don't buy if you don't have money." FED will give up and let the credit supply to go back to equilibrium. GOV will gently break down financial institutions into the smaller compartments, and our saving rate will remain positive. Otherwise the government will over- stretch itself and break down, witch will cause new political parties to gain power and maybe re-write constitution a bit, still we will remain somewhat of a democracy with relatively well defined bill of rights.

Hephasteus's picture

Finally some infrastructure spending in America. We are getting a new Great Wall. Whether we want it or not. :)

straightershooter's picture

Great Wall! Brilliant!

Let us build a great wall, longer, higher and wider, overtaking china's great wall. A US great wall that can be seen from Mars!

Let us pass law mandating the great wall of Us must be build only by manual labor. No machine is allowed. and No steel is allowed ( to prevent mexicans from stealing it) Only pebble, dirt and shovel. That shall create 10 million jobs, paying decent federal employee wages with full health  benefit. Problem solved! 

Comrade de Chaos's picture

I get your point but since they don't play by fair rules why should we? Besides, whoever panics first and raises the barriers first will LOSE the least. So it is logical step to move in first with those measures, unless you can trust CHinese promises of devaluating their currency and playing faire without HUGE export subsidies, etc. So can we trust 'em based on the decade old promise of opening up their market and making their currency flexible?


The trade imbalances are so huge and crisis impacts are so fundamental and severe that trade wars are simply inevitable.

(Unless you believe humans are rational, it's not wise to act the last and depend on your opponent's good will.)

straightershooter's picture

It is ironic that the tires made in China are actually made by US tire corporations using cheap chinese labors. In short, the majority of the profit is earned by US tire companies, not chinese.

It is the steel  union workers in the tire companies who filed the complaint in an attempt to block the outsources of work to outside of the USA. To levy a countervailing tax, one must show the harm done to the industry. In this case, no tire companies ever claim suffering any damange in the first place. heck, they don't even file the complaint.

so, who do you say don't play by the rule?

Brace for impact cause Chinese do not like this, especially after they sent the #2 or #3 leader to the Washington and warn Obama personally.

PS. A significant portion of trade imbalance between China and USA constitutes the profit earned by US corporations doing business in China. While China enjoys trade surplus, but US enjoys non-trade surplus from China, such as services, higher-education ( I guess there could be a quarter million chinese students studying higher degree in USA), etc.

Anonymous's picture

Many of those tyre making facilities will have their site leases expire within five years, reverting ownership to China. Also, they are in partnership with local Chinese companies (really, just a bunch of party members) to insure proper technology transfer etc. The party members tend to dictate to the foreigners how the company in China is run.

With regard to your P.S. China holds about 1T in US Gov Bonds (and many more T in private reserves). US companies are running on credit, not cash. The profit you speak of is an accounting technicality.

Comrade de Chaos's picture

A pretty sound classical explanation. And while I have little against classical econ, you ve got to remember that sometimes the classic econ main assumption that all parties during an exchange will behave in a rational manner is inaccurate. I would have nothing against being nice to CHinese and letting them to gain more than we do, if they would not constantly manipulate the whole equation for over a DECADE. However since they do manipulate, the classical model fails and overall result we gain nothing while they gain everything. Yeah, the prices were low for our consumers, so we sacrificed our investment and net benefit of trade with China would be much lower than claimed.  

And the best approach would be the GAME application. In addition many do not realize but we do have an upper hand with Chinese, since being in control of end user marketing provides flexibility and market power. 


p.s. Pardon my grammar, I ve got a headache.

Hephasteus's picture

I think we are beyond cooperation-defection game theory. We're going to timeout.

Anonymous's picture

You want fair trade? Create a new global currency.
this way no country will be peg it's currency to USD
. USD being reserve currency gives USA unfair advantage.
with global reserve currency every country will
be free from another countries politics.
USD being reserve currency is not fair for rest
of the world.

Through this crisis countries are learning and they
are learning fast. Expect a better future
not just for america but for whole world.

Hephasteus's picture

A global debt based fractional reserve currency? No thanks. A global currency where people can pool their resources and create moderately sized businesses  that don't get out of hand and start having entire countries serve their needs. That I can live with. I will walk to another universe before I spend another lifetime under a FED or an IMF or some stupid rediculous dictatorial system.

Intel has a site up that gives .25 cents for everytime someone goes to it and clicks it and the money goes to starving 3rd world countries. That's 75,000 lousy dollars. That's wine money for half it's top executives and they want 300,000 people to visit a site and click a stupid web page so they can PR over that pathetic crap. This is the kind of world I can strangle. This is the kind of world I don't want to control I want it's disgust. I want it to know no matter how nice it is to me I will make it disgusted. No matter how mean it is to me I will make it more disgusted. No control. No parlez, no if's ands or buts. I'll make freak off fruit all day every day. All life every life till it gags and vomits on it.

Comrade de Chaos's picture

to the ANON above:

Yeah/ I want a fair and free trade. However in order to achieve such sometimes you ve got to stop being nice and tell F. you so you could protect your LONG RUN interests. While our consumers did benefit, the long term manipulation of trade has caused our consumption to shift from its natural equilibrium, hence the long run benefits are rather questionable. They aren't questionable when we talk about trade with Europe, Japan or some other export countries because we all have relatively similar labor and environmental laws. They aren't questionable with some poor countries because difference in labor skills and goods specialization. However long term befits are questionable when a country promises to open its market and does nothing (CHinese open their market only if you shift production / part production to their territory, which we should do the same to take unfair advantage from them; let's say 20% of all components has to be produced in the US within 3 years of acceptance of such a legislation.) They also questionable when a country manipulates its currency and provides huge subsidies to its exporters.


Trick me once, shame on you; trick me 15 times shame on.. common people wake up.

Anonymous's picture

And the wall will be purchased from WALMART no doubt. So ultimately it will come from China. How ironic!

Anonymous's picture

To be purchased from WALMART no doubt. So ultimately it will come from China.

Anonymous's picture

It is becoming quite apparent that the USA sees this as an all-in game.
They do have a PLAN.....and so do the holders of USTs.
Really the US has no choice.....go for it all in the next few years or face catastrophe s of unimaginable proportions.
We WILL DEFAULT in many ways!

Trading Nymph's picture is the real interesting point....GM sells more cars in China than USA. Ford has waiting list in China for the Focus....I have been picking up rumblings that China would just like to rip off model designs and build them themselves under China Auto Makers....NOW this, is Obama just stupid?.....Ok boys and girls....China was already getting ready for this..per China Digital Times last week..."the Chinese government will not turn away from issues that will harm the interests of Chinese industries. Officials from the Bureau of Fair Trade for Imports & Exports with the Ministry of Commerce said China has prepared an assortment of plans for countering different possible results from the Obama administration.

"We will surely protect local tire manufacturers from being hurt when needed," they said.

China will likely take retaliatory measures against the US industries. The Tire Industry Association has petitioned China to launch restrictive measures.

Moreover, experts suggested the Chinese government clamp down on US auto imports. During the first half, China imported more than $1 billion worth of automobiles from the US, up by 9.1 percent year-on-year.

"It's unfair for Chinese laborers, after we made the American automakers happy, if the US launches sanctions against Chinese tire imports," said He Weiwen, a council member of the China Society for American Economy Studies."............Translation, screw you USA we will build our own cars and stick our own tires on them...

They steal from us everyday's picture

Excellent points, trading nymph.  The Chinese brand is called Chery.

This cannot and will not end well.

Ofuckingbama did this to benefit a tiny handful of union members.  I think the number was 8,000.

A trade war to benefit 8,000.  With the only actual 'benefit' being that tires will be more expensive to 300 million of us.  Furthermore the Chinese ABSOLUTELY will retaliate to a much bigger degree because that is exactly what they always do.  In other words, this full scale all out trade war has officially begun due to political pandering on Obama's part.  The Chinese have been waiting for this move, as they suggest.  They are ready.

Way to look out for all of us and not just your political interests, Boy Corporate.


Trading Nymph's picture

Thank you "Steal"...Actually the Chinese are SO smart..

USD sold off cuz probably a lot of people think that China will dump our debt to get back at us over Tariff.....but by doing that it hurts China too cuz they have so much of our Debt still. Instead, if they say "we are imposing a Tariff on USA autos".....the Auto Unions become upset with the Tire Unions, the car makers become great shorts and China gets to build up their automakers with copy cat Ford Focuses and knock off Black Buicks......this is such for China all around if it is played that way.


Hephasteus's picture

The chinese have been dumping the dollar as fast as they could for over a year now. They know that there is no way to do it fast enough without collpasing the dollar. So they are simply trying to stay ahead of the monetization game. At some point they won't care and will just dump the last of thier assets. I think that some day is really really close.