Chinese Rubber Dispute - Round 2
Last Friday, President Obama announced he would impose additional tariffs on Chinese tires but at lower rates than the ITC originally recommended. The ITC proposed 55% the first year, 45% the second year and 35% the third year. The Administration imposed 35% the first year, 30% the second year and 25% the third year, all on tires for cars and light trucks. These duties take effect on September 26th.
Almost immediately, China announced anti-dumping and anti-subsidy investigations into U.S. auto parts and chicken poultry imported into China. There are reports today that China has also filed a complaint at the World Trade Organization seeking dispute resolution (the first step in the process).
While every major tire company that took a stand opposed the effort, the United Steelworkers pushed it. In the end, only time will tell whether any American jobs are affected and how. In the meantime, there are lots of questions posed by President Obama’s decision. For example, while most observers do not see these events causing an all out trade war, what are the implications for the G-20 meeting in Pittsburg on September 24 and 25? What is the impact geo-politically on such issues as Iran's nuclear efforts or those by North Korea? The Chinese have sought to impose their own retaliatory actions over auto parts and chicken poultry which is worth about $2 million, about the same as the value of the Chinese tires imported into the U.S. Will that be the end of Chinese retaliation? Will the Steelworkers be sufficiently emboldened at this outcome so as to bring another petition against another Chinese product? Will the WTO dispute resolution negotiations between China and the U.S. end successfully or will another formal dispute resolution panel be necessary, and if so, will the fact the Chinese agreed to these retaliatory duties as a condition of their admission to the U.S. make a difference to the outcome, where the U.S. usually loses? Is this all political cover for Obama? Does he view granting the tariffs in this case and the retaliation which follows, plus the evident political repercussions, as a means to justify to the labor unions why he cannot reach the same decision in the future if presented with another 421 petition?
