WASHINGTON (Sept. 26, 2012)—With the Obama administration's tariffs against Chinese passenger and light truck tires scheduled to expire at midnight tonight, the word on the street is that President Obama will make no last-minute move to renew them.
The Associated Press has reported that the tariffs—instituted in September 2009 in response to a petition from the United Steelworkers union—would lapse as scheduled.
The tariffs amounted to 39 percent the first year, 34 percent the second year and 29 percent the third year. As of midnight, they are scheduled to return to the traditional rate of 4 percent.
In a statement earlier this week, the USW affirmed it would not request an extension of the tariffs. It decided not to ask for an extension after it learned that the U.S. might have to pay reparations to China, said Leo W. Gerard, USW International president.
The effects of the tariffs have long been disputed by the different sides in the debate. The USW and the Obama administration claim the tariffs rejuvenated domestic tire production and put U.S. tire manufacturing workers back to work.
Tire retailers and distributors, however, claim the tariffs only created shortages on the lower end of the tire market, redistributed tire imports to other countries and cost jobs in tire stores and warehouses.
BB&T Capital Markets issued a report Sept. 26 saying the tariffs increased tire prices by 10 to 15 percent over the three-year period.
“General industry feedback and political claims from the Obama administration would place the job savings from the program at roughly 1,000 to 1,200, while the incremental cost to the U.S. consumers has been estimated at roughly $1 billion,” BB&T said.
“Notably, we believe the largest beneficiaries of the Chinese tire tariff were Korean manufacturers who generally filled the gap in lower price product imports,” it said.
The AP quoted analysts as saying some tire makers may cut prices once the tariffs have lapsed.
Officials of USTR could not be reached for comment.