Obama imposes tariffs on Chinese tires

By JENNIFER LOVEN

AP White House Correspondent

updated 12:31 a.m. ET Sept. 12, 2009

WASHINGTON - President Barack Obama on Friday slapped punitive tariffs on all car and light truck tires entering the United States from China in a decision that could anger the strategically important Asian powerhouse but placate union supporters important to his health care push at home.

Obama had until Sept. 17 — next week — to accept, reject or modify a U.S. International Trade Commission ruling that a rising tide of Chinese tires into the U.S. hurts American producers. A powerful union, United Steelworkers, blames the increase for the loss of thousands of American jobs.

The federal trade panel recommended a 55 percent tariff in the first year, 45 percent in the second year and 35 percent in the third year. Obama settled on slightly lower penalties — an extra 35 percent in the first year, 30 percent in the second, and 25 percent in the third, White House press secretary Robert Gibbs said.

"The president decided to remedy the clear disruption to the U.S. tire industry based on the facts and the law in this case," Gibbs said.

By taking "this unprecedented action, the Obama administration is now at odds with its own public statements about refraining from increasing tariffs above current levels," said Vic DeIorio, executive vice president, GITI Tire (U.S.), the largest manufacturer of tires in China.

Anti-protectionist statements
The decision comes as U.S. officials are working with the Chinese and other nations to plan an economic summit of the Group of 20 leading rich and developing nations in Pittsburgh, to be held Sept. 24-25. China will be a major presence at the meeting, and the United States will be eager to show it supports free trade.

Many of the nearly two dozen world leaders Obama is hosting have made strong statements critical of countries that protect their key industries. Obama, too, has spoken out strongly against protectionism, and other countries will view his decision on tires as a test of that stance.

Governments around the world have suggested the United States talks tough against protectionism only when its own industries are not threatened. U.S. rhetoric on free trade also has been questioned because of a "Buy American" provision in the U.S. stimulus package.

The decision could have ramifications in other high-priority areas, too.

The White House badly needs Chinese help to confront climate change, nuclear standoffs with Iran and North Korea and global economic turmoil. China is the world's third-largest economy and a veto-holding member of the United Nations Security Council.

Beijing says the duties would be a violation of global free-trade principles and has complained about U.S. protectionism.

And Roy Littlefield, executive vice president of the Tire Industry Association, which opposes the tariff, said it would not save American jobs but only cause tire manufacturers to move production to another country with less strict environmental and safety controls, less active unions and lower costs than the United States.

Support for labor unions
At the same time, Obama needs support from unions — also a key backer of the Democratic Party in elections — as he makes a high-stakes push for national health care legislation.

Rep. Louise M. Slaughter, D-N.Y., who chairs the House Rules Committee, said that although the 35 percent levy was less than the 55 percent recommended in July by the ITC, it was still a significant statement of administration support for organized labor.

To reach a compromise on health care, Obama may need concessions from pro-labor Democrats who support a strong stand against China.

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