Trade War Watch 10: WTO Accepts Chinese Tire Complaint, Trade War Escalates

Bertel Schmitt
by Bertel Schmitt
trade war watch 10 wto accepts chinese tire complaint trade war escalates

In September 2009, incoming President Barak Obama slapped a 35 percent punitive tariff on Chinese car and light truck tires exported to the USA. That, in addition to an existing 4 percent duty. No American tire manufacturer had requested the boneheaded move. It was a thank-you to the steelworkers union. Cooper tires openly opposed the action. Ironically, US tire companies were hardest hit by the measure, because they had moved most if not all of their budget segment tire production to low labor cost overseas sites. No job was created in the US. Many were lost. Low cost tire manufacturing simply moved to other overseas countries, which were the only beneficiaries of the useless war.

TTAC warned of a trade war, predicted that China will drag the USA in front of the WTO, and that China would take tit-for-tat measures. All of it became true.

In the trade war dept., China slapped import tariffs or restrictions on imports of U.S. nylon, industrial acid, chicken and other products. It also has initiated an investigation into whether U.S. automakers are selling below cost, or “dumping”, cars in China. The U.S. retaliated, looking into allegations of dumping in other products, amongst those arcane items such as carbon magnesia brick. Last month, the U.S. slapped punitive tariffs on imports of Chinese steel pipes, a $2.8-billion market. Google is making on-again, off-again threats of leaving China. The trade war is escalating.

As predicted, China dragged the USA in front of the WTO. As reported by Reuters, the WTO accepted China’s complaint and agreed to convene a panel. WTO will formalize the panel at a meeting on Jan. 19. The three-judge body will look into whether the U.S. violated WTO rules. According to the Wall Street Journal, “the panel will publish a decision after nine months of investigation. If it finds that the U.S. unfairly imposed the tariffs, it could authorize China to put tariffs on key U.S. imports, up to the amount lost by Chinese exporters because of the duties. The U.S. can appeal, meaning the case could last several years.”

Says Reuters: “The time it will take to fight the case, and then revoke the tariff if Washington loses, means the tire tariffs will have been in place for most of their original three-year duration.”

The WTO complaint is widely seen as a blocking action by the Chinese to discourage the U.S. from further invoking the special safeguard clause that was rammed down the Chinese’s throats when they joined the WTO in 2001. Other safeguard complaints are piling up, and the Obama administration appears trigger-happy. A moronic trade war with Japan over nearly non-existent U.S. car exports to Japan was avoided by Japan giving in to nonsensical demands of Detroit’s automakers, which hat already mobilized Hillary Clinton and Betty Sutton.

The discriminatory safeguard clause against Chinese imports will expire in 2013, probably before the current tire complaint will have run its course. A lot of damage can be done in these three years. Trade wars exert a big price, paid by the consumer at the check-out counter. Prices of tires are already going up, and higher rubber prices will exacerbate the matter.

Students of history may note that trade wars during recession times can lead to full blown depression.

Join the conversation
2 of 22 comments
  • Texlovera Texlovera on Jan 20, 2010

    One minor quibble: I would not characterize President Obama as an "incoming" President as of September, 2009. He'd been in office 8 months or so...

  • Golden2husky Golden2husky on Jan 24, 2010

    Tariffs on imports like this generally are a bad idea, but lets be real: China taking the US to the WTO? Saying the US is dumping? Please. For every item the US may "dump" there are no doubt hundreds of items that the Chinese dump every day.

  • Lou_BC Panther black? Borrowed from Dodge panther pink? One could argue that any Camaro is a limited run.
  • SCE to AUX I much prefer the looks of the Tucson version, but either is a great value.How was the driveability, namely the electric/gas transition? I had H/K's first attempt in a 13 Optima Hybrid (now in my son's garage), and it was gruff and abrupt in that phase of driving.
  • SCE to AUX My guess of $60k from a few years ago may be low.My EPA estimate would be 263 miles, but that's unladen, temperate conditions, driven at the speed limit, and 0% left in the tank - all unrealistic.Subtract 15% for full payload, 20% for cold, 10% for speed, and 20% minimum battery level, and you're down to 129 usable miles at times. Even in nice conditions (springtime, town driving), I'd only expect 180 usable miles.This vehicle will have the same challenge as electric pickups do - when used as intended (traveling with family and stuff in this case), the utility is lost.When these hit US roads, expect to see videos of unhappy/surprised customers who thought this thing would go 260+ miles all the time. For starters, it should have a 150 kWh battery, minimum, and then you're talking real money.No, I wouldn't buy it, but it might be a fun rental for local driving.The common argument "once everyone who wants one gets one, sales will die" may not apply here. 789k New Beetles were sold in the US from 1998-2021. True, sales dropped 50% in 5 years, and another 60% in the next 5 years, but it ebbed along for two decades, helped by a refresh along the way. That's not a bad run for a niche car.
  • Theflyersfan I still have visions of Radio Shack and Circuit City and Silo - the huge walls filled with hundreds of aftermarket cassette players fit for any budget and style. And the eyes would always go to the Alpine ones with the green lighting. When I see the old Japanese cars like this, I'm always reminded of those aftermarket stereos because it was like a rite of passage slapping in your own cassette deck and maybe if your rich enough, four new speakers, and mega-bucks here, the equalizer and amp. And this Toyota still has less rust on it than an 07 Silverado, so there's one positive.
  • Parkave231 Agree with everyone else here -- big initial push, and then everyone who wants one will have one.I am curious whether, or how much, extra engineering they had to do with respect to the front crash structure. Yes, this isn't a cab-over situation like the original and many 60s/70s vans, but there's still not a lot of real estate between you and the front bumper. (Maybe it's just an illusion.) I suppose with just enough nose and empty space in front of the firewall they could have a pretty beefy impact system there.