Editorial: U.S. tariffs on Chinese tires may hurt recovery

The Detroit News

Michigan workers could pay a price for President Barack Obama's decision to impose tariffs on Chinese tire imports. And tariffs, adopted at the behest of the steelworkers' union, could prompt demands for other tariffs as well, which could hurt the nation's economic recovery.

The president has said he supports free trade, but his use of his discretionary authority under trade regulations to slap new 35 percent tariffs or taxes on Chinese tire imports speaks louder than his protestations in favor of free trade.

China has already threatened retaliation on U.S. poultry and auto parts exports. If the disagreement escalates, both imports of Chinese auto components for domestic cars and exports of U.S.-made vehicles and auto parts could be affected. Last year U.S. auto companies agreed to export more than $2 billion in vehicles and auto parts to China.

Michigan's total exports to China last year amounted to $1 billion.

For these reasons, it's not surprising that U.S. automakers and even U.S. tire manufacturers did not support the tariffs on Chinese tires. China's exports, amounting to $1.8 billion or about 17 percent of the tire market, are mostly at the low end of the market. The U.S. tire makers, Cooper and Goodyear, manufacture tires in China and import them into the United States because it isn't cost-effective to make them here. The tariffs will hurt them, too.

The Chinese tires are used on 5 percent of the cars assembled here, and U.S. automakers warned that the tire tariffs could drive up the cost of these vehicles by $50 to $150 each.

The tire tariffs, considered in the context of nearly $200 billion in total U.S.-China trade so far this year, are an irritation. But coupled with other trends, they are ominous.

As part of climate legislation, some Democrats in Congress are calling for additional tariffs on nations that don't match U.S. emissions regulations. A letter demanding tariffs signed by 10 U.S. senators, including Michigan Democrats Carl Levin and Debbie Stabenow, specifically mentioned steel manufactured in China.

China is this nation's third largest trading partner and a huge potential source of buyers for U.S. vehicles. The Detroit Three automakers have been cultivating the Chinese market for years for industrial equipment as well as cars.

The role that a huge increase of tariffs had in exacerbating the Depression of the 1930s is well known. But unions and other special interests may well be tempted to press their demands for protectionism now that the president has accommodated the steelworkers. Obama has just made the task of resisting more trade barriers that much harder for himself. That's a high price to pay for taking care of political supporters.