The USITC and tire tariffs: What on earth happened?

It’s the decision that knocked the U.S. tire industry back on its heels.

Tariffs will now not be assessed on Chinese-made truck and bus tires imported into the U.S after the U.S. International Trade Commission overturned a previous decision to impose anti-dumping and countervailing duties. The commission says imported Chinese tires are not injuring the local industry — which is the basis for imposing tariffs.

More than 8.9 million truck and bus tires worth $1.07 billion were imported to the U.S. from China in 2015.

The five-member commission (a sixth member had recused himself) voted three-to-two to deny relief for the local industry from dumped and subsidized Chinese tires. The panel had previously determined the imported tires were damaging the local industry and the U.S. Department of Commerce (DOC) had announced it would issue anti-dumping duties of between nine and 22.57 percent.

Shock decision from USITC

The shock decision followed the DOC admitting it had made errors in its calculations on the countervailing duties it had planned to impose on two Chinese manufacturers — Double Coin Holdings Ltd. and Guizhou Tyre Company Ltd. The companies challenged the decision.

Double Coin’s rate had been dropped from 38.61 percent to 20.98 percent and Guizhou’s was lowered from 65.46 percent to 63.34 percent. Other Chinese company’s rates would drop 10 percentage points from the 52.04 percent planned to 42.16 percent. But that’s all academic now.

China’s powerful Ministry of Commerce had criticized the DOC and USITC’s original investigations, saying they were “defective” and “ignored facts.” MOC trade official Wang Hejun had publicly called for the U.S. to “abide by the World Trade Organization rules and correct its mistakes.”

Steel Workers’ union reacts

The USITC’s decision reversal sparked outrage from the United Steel Workers Union (USW) which — together with Titan International — had been a big supporter of the tariffs.

“The ITC Commissioners made a huge mistake,” USW International president Leo W. Gerard said. “While the DOC identified subsidies of up to more than 60 percent and dumping of up to almost 23 percent, the ITC failed to support relief for the injured workers. That simply ignores the facts and the harm that Chinese unfairly-traded exports have caused the workers.

“The size of the margins clearly indicated the serious nature of the problem. Our members can compete against companies, but not countries. That’s exactly what happens when it comes to competing against China.”

USW International vice president Tom Conway added: “China continues to ramp up capacity throughout the tire sector, seeking to sell here at any price. It is time for the government to step in so that workers do not have to continue to shoulder the burden of failed trade agreements and policies. Workers are demanding that our government stand up for their interests.”

Not everyone is unhappy

But not everyone in the tire industry is upset with the USITC’s decision. Big tire companies that manufacture truck and bus tires in China have welcomed the announcement. The counter argument to the idea Chinese imports are hurting the local industry is that the domestic industry could not manufacture enough tires to keep up with demand.

The USITC will release its report into its decision on March 15.

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