Tariff On Tires Ignites Debate On Prices, Jobs When the Obama administration slapped tariffs on Chinese-made tires, the move was cheered by organized labor. But analysts say the action is not likely to save many jobs. And it may cost consumers more to replace their tires.
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Tariff On Tires Ignites Debate On Prices, Jobs

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Tariff On Tires Ignites Debate On Prices, Jobs

Tariff On Tires Ignites Debate On Prices, Jobs

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Next week, the U.S. government will slap a tariff on tires made in China. The United Steelworkers Union fought for the measure, saying it will save American jobs. But trade analysts doubt the tariff will help workers all that much. And as NPR's Frank Langfitt reports, tire dealers say the immediate impact will be higher prices.

(Soundbite of phone ringing)

Mr. KEVIN HANAGAN (Owner, Hanagan's Auto Repair): Hanagan's.

FRANK LANGFITT: Kevin Hanagan runs a car repair and tire service in Gaithersburg, Maryland. A customer is hunting for trailer tires.

Mr. HANAGAN: All in all, we can do for $86 apiece. You may want to buy them today because, you know, our wonderful president imposed that 35 percent tariff on these Chinese tires. So they will be going up.

LANGFITT: Suppliers tell Hanagan they'll be raising prices by up to 20 percent. Earlier this week, he bought hundreds of Chinese-made tires to beat the tariff.

Mr. HANAGAN: There was a panic buying with me, you know, hoard what you can while you can. So that we wouldn't be caught, you know, empty-handed.

LANGFITT: Hanagan says he supports American workers, but he says the tariff will just raise prices for his most cost-conscious customers.

Who's going to get hurt by this tariff?

Mr. HANAGAN: Joe the plumber. The average dude, you know, that wants to buy some tires for his vehicle.

LANGFITT: Last week, President Obama invoked a unique trade provision. It allows the government to levy tariffs if Chinese imports, quote, "disrupt" the American market. Since 2004, Chinese tire imports here have tripled. Paul Moorcones runs Radial Tire, a wholesaler in Silver Spring, Maryland. Every year, he sees more tires coming from China. Moorcones shows me a stack in his warehouse.

Mr. PAUL MOORCONES (President, Radial Tire Company): One particular trailer tire that was built by a division of Goodyear in Canada for years and years and years, and we sold them by the hundreds, and they just disappeared off the market for about a year, reemerged, and lo and behold…

LANGFITT: He glances at the lettering on the inner rim.

Mr. MOORCONES: Made in China. So this is a product that went directly to China from Canada.

LANGFITT: Just how much the new tariff will cost consumers is a matter of debate. Chinese tires dominate the low end of the market, where prices are $60 or less, but the tariff is levied before wholesale and retail markups. So, Moorcones thinks it won't add more than $10 a tire. The Steelworkers insist it will be even less.

Mr. JIM WANSLEY (Former United Steelworkers President, Tyler, Texas): The American consumer, the impact on them is just very, very negligible.

LANGFITT: Jim Wansley was president of a Steelworkers local in Tyler, Texas. Goodyear shut his plant two years ago because it couldn't compete with low-cost Chinese tires. Wansley hopes the tariff allows American companies to bring jobs back at some closed factories.

Mr. WANSLEY: Those plants can be re-manned, and the unused equipment can be started back up very quickly.

LANGFITT: Nick Lardy is skeptical. Lardy is a China scholar at the Peterson Institute for International Economics, a Washington think tank. He says companies will just move production in China to another country.

Mr. NICK LARDY (Senior Fellow, Peterson Institute for International Economics): No one in the tire business is going to open a factory to produce these tires in United States because they know these tires are going to be coming next from Brazil and India and other countries that can produce tires more cheaply than we can.

LANGFITT: In response to the U.S. tariffs, China has threatened its own on American chicken and auto parts, but Lardy doesn't expect a trade war. He says the countries need each other too much.

Mr. LARDY: They lend us the money so we can buy more of their goods than we can really afford, at least that's been the pattern in the last five years. Either side, of course, could disrupt it, but they would pay a pretty hefty price.

LANGFITT: Lardy says the tariff isn't really about international trade. It's about American politics. Lardy and other analysts think the president is rewarding organized labor for support during the election and hoping to inspire unions to fight for his health care plan.

The White House denies all this. So does Tom Conway, a Steelworkers vice president.

Mr. TOM CONWAY (International Vice President, United Steelworkers): It's almost ridiculous to think that the White House can honestly link the two together. I mean, I think this president's on the right track with health care, but this tire decision has nothing to do with our support of him on health care.

LANGFITT: Now that the Steelworkers have succeeded in getting a tariff, Lardy, the economist, thinks other groups will try as well. After all, the list of people who'd like relief from Chinese competition is long.

Frank Langfitt, NPR News, Washington.

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