PROGRESSIVEECONOMY TRADE FACT OF THE WEEK: U.S. tire production,
imports are both up since 2009.
THE NUMBERS: Tire imports –
Jan.-June 2008:
Jan.-June 2009:
Jan.-June 2010:
Jan.-June 2011:
77.2 million
58.2 million
70.2 million
75.5 million
WHAT THEY MEAN:
American automobile-tire tariffs are usually 4.0 percent. The Obama administration's
three-year 'safeguard' plan, announced on September 12th 2009, impose special tariffs on
auto tires from China: 35 percent in the first year, 30 percent in the second, 25 percent in
the third. The program has now won legal approval: after 18 months of litigation, the
WTO has rejected a Chinese complaint about the tire tariffs. With the legal issues settled,
what practical effect does a step like this have? Some data:
(1)
Trade: Tire imports from China have dropped sharply. Chinese factories
shipped 25 million tires to the U.S. in the first half of pre-crisis 2008, and 23 million in
the first half of 2009; in the first half of 2011 the figure was 15 million. On the other
hand, tire imports are much higher now than in 2009, as imports of Korean, Taiwanese
and Southeast Asian tires have roughly doubled. The worldwide import total is about the
same as that recorded for pre-crisis 2008.
World
Asia
China
Korea
Taiwan
ASEAN
Jan.-June 2008
77.5 million
50.0 million
24.9 million
5.5 million
1.8 million
6.5 million
Jan.-June 2011
75.5 million
49.0 million
15.3 million
11.2 million
2.9 million
12.1 million
(2)
Production: U.S. tire production fell sharply during the crisis (according to the
Rubber Manufacturers Association) from 237 million auto tires in 2008 to 202 million in
2009. Production then grew to 232 million in 2010 and a likely 238 million this year.
(3)
Employment: The Bureau of Labor Statistics found 59,800 Americans making
tires in September 2008, 50,800 in September 2009, and 51,200 as of August 2011.
Employment in other rubber products fell more sharply than tire-making during the crisis
and have rebounded more sharply since - from 84,000 in September 2008 to 68,000 in
September 2009, and 75,000 as of August 2011.
Overall: After two years, then, the tariff appears effective at bringing down imports from
China as well as legal under the WTO agreements. On the other hand, the most visible
consequence seems to be promotion of tire-imports from other Asian countries. U.S. tire
production, employment, and import levels appear to track the economy rather than trade
policy: down sharply in 2009, back up since.
FURTHER READING:
The U.S. Trade Representative Office explains the tire safeguard, 2009:
http://www.ustr.gov/sites/default/files/Information%20on%20China%20Tires%20Safegu
ard.pdf
The WTO rules on the case, 2011:
http://www.wto.org/english/news_e/news11_e/399abr_e.htm
The Rubber Manufacturers Association has data on tire shipments:
http://rma.org/newsroom/
Context How high is a 30 percent tariff? The "average" U.S. tariff rate, based on dividing the $26
billion in tariff revenue as of 2010 by the $1.5 trillion in goods imported outside the
network of free trade agreements and preference programs, is about 1.7percent. The
rubber tariff rates are typical: 2.5 percent for rubber tubing, 4.2 percent for erasers, 4.3
percent for artificial dog bones, 2.7 percent for hockey pucks, 4.0 percent for car tires,
zero for motorcycle and airplane tires, rubber surgical gloves, natural rubber in sheets,
contraceptives, and beach balls. In this context, the safeguard tariffs - again 35, 30, and
25 percent - are very high.
On the other hand, tariffs of this level are not unusual and high but normal and permanent
for shoppers buying handbags, shirts, shoes, and underwear. The permanent tariff on
acrylic sweaters and men's polyester shirts, for example, is 32 percent; canvas purses get
28 percent. A comparison, matching imports and tariff collection for 2010 on auto tires
against imports and tariff collection on underwear - where permanent rates are 16.9
percent for polyester brassieres, 6.1 percent for cotton boxers, and 23.5 percent for corsets
- finds the Customs Service import totals lower, and tariff collection higher, on
underwear:
2010 Imports
Rubber auto tires $10.3 billion
Underwear
$7.0 billion
2010 Tariffs
$586 million
$731 million
ProgressiveEconomy's Ed Gresser explains the tariff system, and applauds two reform
efforts: http://www.globalworksfoundation.org/Documents/tariffs.taxation.final.pdf
UNCTAD explains rubber planting, tapping, and production:
http://www.unctad.org/infocomm/anglais/rubber/crop.htm
And the official U.S. rubber-tariff rates:
http://www.usitc.gov/publications/docs/tata/hts/bychapter/1101c40.pdf