China loses a battle over tires, but other battles lie ahead

When President Barack Obama imposed tariffs on cheap tires being imported from China two years ago, we predicted that China would decry that move as protectionism.

Indeed, China did, and it took its claim all the way to the World Trade Organization, which responded this week.

The WTO’s top court has ruled that the United States was entitled to impose duties on Chinese tire imports under rules that allow trade partners to impose tariffs to counter a destabilizing flood of imports.

It feels good to win one of these battles, especially knowing that the Obama administration was willing to take on China in a way that the George W. Bush administration declined to do no fewer than four times.

Acting on a recommendation of the U.S. International Trade Commission in September 2009, Obama imposed the tariffs on the basis of a four-fold increase in tire imports from China between 2004 and 2008, from $453 million to $1.7 billion. Obama showed more restraint than the ITC called for. It recommended that the president impose a 55 percent tariff on Chinese tires in 2010, 45 percent in 2011 and 35 percent in 2012. Obama opted for tariffs of 35, 30 and 25 percent.

Still, China pursued its two year fight against tariffs and, thankfully, lost.

China was right in one regard in that it predicted that the tariffs would not restore the lost U.S. production of low-cost tires, it would only encourage imports from other cheap tire producing nations like Brazil and Mexico. With a few exceptions, most of those 5,000 jobs Americans had held for decades producing low-end tires were gone forever as almost every producer shifted production off shore.

But in making that argument, China actually showed why it is important for the United States to respond quickly and forcefully to predatory imports — not just in tires, but in steel, pipe, paper and a thousand other areas, including high- and green-technologies.

Fighting every flood

If China — or any other importer — is permitted to flood U.S. markets with goods that destroy any domestic industry, no domestic industry is safe. The price of maintaining jobs in the United States is vigilance and a willingness to fight to protect American jobs.

And, while we note that most of those American tire-making jobs were lost, U.S. Sen. Sherrod Brown, D-Ohio, cited one exception. After Obama announced the tariffs, Cooper Tire & Rubber Co. announced plans to add capacity to its Findlay works and hire up to 100 people. While 100 jobs is not a lot in the overall scheme of things, it is everything to 100 American families.

The U.S. balance of trade remains wildly out of kilter, as we have commented on consistently for more than a decade. That won’t change until American consumers come to recognize that cheap imported goods carry a hidden price tag, and until every president, regardless of party, aims for fair trade over free trade.