US tire tariff to cause 100,000 job losses in China

Shanghai, September 14 (Gasgoo.com) US President Barack Obama's decision to impose punitive tariffs on tires imported from China may cost 100,000 Chinese workers lose their jobs, the state-run China Daily reports on Sunday.

President Obama signed a determination on Friday to impose a tariff on tires from China in response to complaints that a surge of imports had undermined the U.S. industry and contributed to the loss of more than 5,000 jobs.

The tariff will amount to 35 percent the first year, 30 percent the second year and 25 percent the third year. A federal trade panel had recommended a levy of 55 percent.

"Obama's decision may affect the employment of 100,000 tire workers in China and may bring an aggregated loss of $1 billion to China's tire exporters," Fan Rende, chairman of China Rubber Industry Association,

"The new tariff will be highly damaging to China's tire industry," said Fan, adding that Chinese tire companies may not be able to export tires to the US due to the unreasonably high tariff of 35 percent starting from next year.

There are currently twenty tire producers in China and four of them are from the US. He did not reveal the names of the four producers, but currently US tire manufacturers, such as Bridgestone/Firestone, Goodyear, Michelin and Cooper have operations in China.

"Such special safeguard measures target particularly at China," said Zhang Yansheng, director of the National Development and Reform Commission's (NDRC) Institute of Foreign Trade. In addition to investigations against China launched by developed countries represented by the US, India also initiated 5 cases of investigation against China this year.

"After the U.S. takes safeguard measures against Chinese tires, other countries may also follow suite in order to prevent the Chinese tire trade diversion." Zhang Yansheng said.

By losing a huge market for China's tire exports, China would shift its focus from the US market to ASEAN countries, Africa, East Europe, Middle East and South East Asia, Fan said, admitting that it will be a difficult transition and may incur more trade conflicts. In addition, some focus may be shifted to the domestic market. "It is really difficult to adjust, as one third of our tire exports were for the US market," Fan said.

The Chinese commerce ministry said Saturday that it strongly opposes the U.S. decision on tires and may refer the case to the World Trade Organization.

Two days after Obama made his decision to impose tariffs on Chinese tires China announced on Sunday to start dumping and subsidy investigation of chicken and auto products from the U.S. The state-run China Daily newspaper said in a front-page article today that the probe was "not revenge" for the decision on tires.

A Chinese worker moves large tires at an assembly line for buses made by Chinese auto
manufacturer Foton Motor Group in Beijing, China, on Sept. 11, 2009. (Photo:AP)