Job losses possible

Chinese-made tires are mostly lower-priced products and do not compete directly with US-made tires, distributors told a hearing earlier this month. An increase in the trade tariff against Chinese tires will cause more job losses in the US and additional expenditure for American consumers, they claimed.

"American tire makers are not producing entry level tires, which are the subject of this trade dispute," Jim Mayfield, president of Del-Nat Tire Corp, which represents small and independent tire distributors in the US, was quoted as saying by Xinhua news agency.

He said for the past 15 years, major US producers had focused on more profitable and better performing tires instead of those serving the low end of the market.

Distributors like himself rely on foreign suppliers to cater to that market, he said.

"They tell me we have gotten out of that business and we are not going back," Mayfield said.

Cooper Tire & Rubber Co, the second-largest US tire maker, said it opposed imposing punitive tariffs on Chinese tires as it would prevent them from importing low-cost tires that they make in China to complement the premium tires they make in the US.

"It could impact our operations in China," Cooper's chairman and chief executive officer, Roy Armes, told Shanghai Daily last week. "We realize that we have to compete on a global basis and to have free and fair trade that allows the market to grow and to be successful."

Thomas Prusa, a professor of economics at Rutgers University, said if higher tariffs make Chinese tire exports unprofitable, for every job saved or recreated at an American tire factory, up to 25 jobs in the distribution sector could be lost.

Prusa said the ITC ruling cast only a narrow view on the job losses in the US tire industry and lacked consideration of the overall impact to the US economy. He estimated that US consumers would have to shell out at least US$600 million more if they were forced to buy more expensive US-made tires.

Xue at the Shanghai Institutes for International Studies said any Obama acquiescence to the US tire makers' claim would be a blow to Sino-US trade relations.

"A good bilateral trade relationship is important for China as well as the US," Xue said. "Any rash decision may cause serious losses in both countries, even trade wars," he said. "Luckily, in this case, the Obama administration has the power to make a final ruling, and Chinese senior officials have tried to do what they can to have the decision turn in their favor."

(Shanghai Daily August 28, 2009)