WASHINGTON (Aug. 11, 2009)—The three U.S. domestic car makers are asking the Obama administration to exempt OE tire imports from China from trade restrictions being considered, claiming that to do otherwise would “harm the U.S. automotive industry à while providing little or no corresponding benefit” to the domestic tire industry.
The plea, made at last week's hearings at the Office of U.S. Trade Representative in Washington by the Automotive Trade Policy Council on the auto makers' behalf, drew a sharp rebuke from United Steelworkers union, which is seeking the import restrictions in an effort to protect jobs at U.S. tire plants.
The ATPC estimates including OE tires—which represent about 5 percent of tires imported from China—among those subject to tariffs would increase the cost of tires for affected models by $50 to $150 per vehicle.
“This burden would fall disproportionately on our most price-sensitive consumers and some of our newest fuel-efficient models,” the group wrote.
The ATPC did not specify which U.S. car models use Chinese-made tires, but ATPC President Stephen Collins told the USTR that its members—Chrysler L.L.C., Ford Motor Co. and General Motors Corp.—have committed “considerable resources” to develop the engineering oversight and quality processes necessary to source OE-quality tires from Chinese tire plants.
The ATPC also argued that subjecting OE tires to the proposed tariffs—as much as 55 percent of value initially—would undermine the Obama administration's efforts to stabilize U.S. car companies and the industry's efforts to improve fuel mileage.
The ATPC echoed other parties' contentions that restricting Chinese imports for a three-year period “is unlikely to justify the expense of reopening a closed North American facility” and that offshore sourcing would shift to other low-cost production sites.
Additionally, the ATPC expressed concern that restricting the U.S. car makers' supply of low-cost OE tires could result in “enhanced pricing power” for the leading tire companies, thereby leading to price increases across the entire OE range.
The ATPC describes itself as a nonprofit trade association that represents the common international economic, trade and investment interests of its member companies.