US agency rules for tire producers in China case

U.S. tire companies are being harmed by products from China, a U.S. agency ruled, setting up a decision by President Barack Obama on whether to impose tariffs or quotas on America's biggest source of imports.

The U.S. International Trade Commission ruled 4-2 that U.S. producers are being hurt by $1.7 billion in Chinese imports. The panel will now come up with recommendations on what Obama should do to help tire makers such as Akron, Ohio-based Goodyear Tire & Rubber Co. and Findlay, Ohio-based Cooper Tire & Rubber Co.

"The remedies that will be delivered to President Obama will allow the time necessary to rebuild the U.S. tire industry," said Leo Gerard, president of the United Steelworkers union, which filed the case on behalf of the workers it represents at tire factories.

By law, Obama has to make a decision on the so-called safeguard petition by September.

The case is the first test for Obama on trade with China, after he vowed during his presidential campaign last year to help unions or domestic industries seeking relief from foreign competition. Since the election, he has also pledged to avoid protectionism so as not to exacerbate the global recession.

The United Steelworkers want Obama to cut imports of automobile tires from China by more than half to 21 million, the level in 2005. China sent 46 million tires to the U.S. in 2008.

U.S. tire dealers and importers argue domestic tiremakers such as Goodyear and Cooper have no interest in the low-cost tire market that China serves. The U.S. companies make branded tires, which are often sold to vehicle manufacturers. The Chinese imports are typically not branded and sold to consumers through low-cost outlets such as Wal-Mart Stores Inc., according to GITI Tire Pte Ltd., China's largest tire producer.

In Testimony

GITI Tire said in testimony to the ITC that declines in auto sales, automation of tire production and increases in raw material costs are driving the increase in Chinese imports.

"No matter what the ITC recommends, we do not believe that American manufacturers will increase production in the United States of low-cost tires," Vic DeIorio, executive vice president for GITI in the U.S., said in an e-mail. "They will still focus on premium tires."