Bloomberg News reports: "The Chinese import surge has been a significant factor that has led to the idling of factories," Leo Gerard, president of the United Steelworkers, told reporters. The union represents about 15,000 tire workers at 13 plants including those owned by Bridgestone Corp and Goodyear Tire and Rubber Co."
The ITC, set up under our trade laws, has now, by a 4-2 vote, agreed with the union and then went even further recommending stiff tariffs on all Chinese made tires in a remedy sent to President Obama. Perhaps unknowingly, the ITC decision also puts tariffs on Goodyear tires made in China, potentially hurting a US company as well. (1 out of every 6 tires manufactured by US firms are made in China!)
Explains the news service: "The president has the final decision over whether to take action or disregard the commission's recommendation, and that will be due in September."
Gerard sees the decision as a big victory but the logic is illogical and illustrates the dilemma of trying to fight our economic decline in an age of globalization by taking refuge in protectionist policies that often lead to counter attacks, in this case, from the one country that has kept the US economy alive by buying our treasury bills and debt.
Without China's financial support, we would be in far more dire straits, perhaps a deeper depression. Everyone knows that.
What's most revealing is that that none of the US-based tire companies have joined the union in this China bashing. If their business was at risk from predatory trade practices from China, they would speak up, but they know that tire imports from China constitute only 11% by value of the US tire market.
Another reason for the silence of US companies: they had long ago stopped producing lower-cost so-called "Tier 3" tires and instead opted to manufacture premium more expensive and more profitable products which are not in the same category, hence, not directly competitive. Some of these companies benefit as well because import the third tier economy-priced tires from China for their own US distribution networks.
When US brands got out of the cheaper so-called replacement-tire low-profit market, China got into it, including working through these US manufacturers' American distribution networks and dealership which hire thousands of American workers. They service cost-conscious US consumers who can't afford higher priced brands. These consumer will be hurt if the Steelworkers and ITC prevail in this wrong-headed move.
And who are they? They are the union's own constituency, American workers who are coping with high unemployment levels and all sorts of economic distress because of the collapse of our financial system. Why victimize them further?
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