Trade wars heat up!

On the back of china announcing last week a 25 percent drop in exports.....

By Mark Drajem
Sept. 11 (Bloomberg) -- President Barack Obama imposed tariffs starting at 35 percent on $1.8 billion of tire imports from China, backing a United Steelworkers union complaint against the second-largest U.S. trading partner.
The additional duties would last for three years, dropping in the second year to 30 percent and the third year to 25 percent, according to an administration statement today.
“This administration is doing what is necessary to enforce trade agreements on behalf of American workers and manufacturers,” U.S. Trade Representative Ron Kirk said in a statement. “Enforcing trade laws is key to maintaining an open and free trading system.”
The case is the largest so-called safeguard petition filed to protect U.S. producers from surging imports from China, and was a test of Obama’s approach to trade disputes. The steelworkers union, a key political ally of Obama, represents 15,000 employees at 13 tire plants in the U.S.
The independent U.S. International Trade Commission recommended that Obama impose duties for three years, starting at 55 percent. Tariffs that steep would effectively block imports of tires from China, Cooper Tire & Rubber Co., the second-largest U.S. tiremaker, said in a filing to the U.S. trade office.
All of the U.S. tire makers have operations in China, according to the ITC, and none of them publicly supported the steelworkers complaint. Goodyear Tire & Rubber Co., the largest U.S. tiremaker, stayed neutral.
‘Effective Relief’
Senate Majority Leader Harry Reid urged Obama in a letter this month to provide “effective relief” for the tire companies, saying action is necessary if Congress is to approve new trade deals in the future.
“This is going to be a test, not just for the president but for this administration,” United Steelworkers President Leo Gerard said in an interview before the announcement. “If they can’t enforce this, how can Congress ever trust them with any other trade deal?”
Chinese officials and a lobbying group for multinational companies such as Caterpillar Inc., Citigroup Inc. and Microsoft Corp. have urged Obama to refrain from curbing imports, saying it could lead to a “downward protectionist spiral.”
Former President George W. Bush turned down each of the four requests for such trade safeguards in other industries, saying they would do more harm than good to the U.S. economy. Obama pledged during the election campaign to take a harder line against Chinese trade barriers, and said he would assess these safeguard cases on their merits.
Since taking office Obama has vowed to avoid any new protectionist measures.
To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net Last Updated: September 11, 2009 21:36 EDT