8/7/2014 Updated 8/11/2014

Editorial: This time around, stakes are different in China trade war

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By Rubber & Plastics News Report Follow Author

Round 2 of the trade debate over whether antidumping and countervailing duties should be placed on passenger and light truck tire imports from China is well underway.

At first glance, the issues seem very much the same as five years ago when President Obama approved three years of elevated tariffs on such imports, a measure that ended in September 2012. Since those duties ended, the United Steelworkers union said Chinese imports of these tires more than doubled from 24.5 million in 2011 to 50.8 million tires in 2013.

Just as in 2009, the USW—which started the process anew with its petitions submitted to the International Trade Commission in early June—still insists duties are necessary to level the playing field and neutralize what it sees as a threat to its members' jobs.

The Chinese tire makers stand by their position that these imports do not compete directly with premium tires made in the U.S., and that recent positive financial results for U.S. tire makers suggest Chinese imports do not threaten them.

And the Tire Industry Association, representing independent tire dealers, says that duties on Chinese tires will only create shortages in the low end of the tire market, causing prices to rise for low-income tire buyers. The group contends that jobs will be lost among tire dealers, importers and distributors should the USW prevail.

But the stakes actually are a bit different in this case. In 2009, the USW sought action under a provision of the trade act designed specifically to help U.S. industries hurt by surging Chinese imports.

This time, however, the union has filed for relief under the antidumping and countervailing duties section of trade law. While the 2009 tariffs were meant to be temporary, if duties are enacted again, the fix will be more permanent, with automatic reviews coming only every five years.

It is no secret that politics plays a large role in such matters, but the ITC needs to follow certain guidelines in its decision: Are the actions of the Chinese government making for an unfair playing field, and are parties being injured by it?

In its initial analysis to forge ahead with the investigation, the Department of Commerce found dumping margins on Chinese tire imports into the U.S. ranging from 45.8 to nearly 90 percent.

If that is found to be accurate, it is clear that China is trying to tip the scales in its favor. So the ITC then will need to focus on whether anyone is being injured and—if so—what should the remedy be.