It’s a step in the right direction for America’s rubber industry workers, who in recent years have faced an onslaught of subsidized and dumped tires.
The Commerce Department on Wednesday announced a preliminary decision to impose tariffs on passenger and light truck tires imported from Vietnam, citing the country’s “undervalued currency” as the reason for trade enforcement action.
The tariffs on the tires will range from 6.23% to 10.08%. It is the first time that the agency has cited currency manipulation in a trade enforcement action, and is an important step toward leveling the playing field for American workers.
Currency manipulation essentially acts as an artificial subsidy to a country’s exports, making their goods less expensive. At the same time, it serves as a tax on U.S. exports, which makes U.S. products less competitive globally.
“We are gratified with results of the Department of Commerce’s investigation and acknowledgment that currency manipulation has disrupted our market,” said United Steelworkers International President Tom Conway.
The USW filed the petition in the case on behalf of the tens of thousands of American workers it represents in the rubber and plastics industries, including at tire plants in Alabama, Arkansas, Kansas, Indiana, North Carolina, Ohio, New York and Virginia.
“Clearly, the fight for a level playing field must continue,” Conway added. “In almost every industry the USW represents workers, our jobs are vulnerable to illegally traded foreign imports, and our families and communities are the first to suffer the consequences.”
It’s not the only tire-related trade case before the Commerce Department. The agency also is conducting a concurrent investigation into passenger tires imported form South Korea, Taiwan, Thailand, and Vietnam, with a decision expected by Dec. 29.
The USW filed its anti-dumping and countervailing duties petition on the tires with the Commerce Department and International Trade Commission in March, arguing that these imports receive unfair subsidies and are dumped into the U.S. market.
But the problem originates in China.
For years, unfairly traded imports from China threatened U.S. workers and tire producers. In 2015, the Commerce Department took action, issuing anti-dumping tariffs of 87.99% on imported passenger and light truck tires from China. The agency recently moved to uphold those tariffs, determining that China would likely resume dumping tires into the U.S. market if they were removed.
Commerce’s 2015 action saved the domestic tire industry, according to Kevin Johnsen, who chairs USW’s Rubber and Plastics Industry Conference, as there was a dramatic reduction in imports of Chinese-made passenger and light truck tires. In 2014, imports reached 60.5 million tires; they dropped to 3.4 million tires in 2019.
But just as things began to stabilize, Chinese producers began looking for a way to avoid the tariffs, investing in facilities in South Korea and Thailand to get around the duties.
Imports from the four countries collectively shot up 20% from 2017 to 2019, according to the USW. Roughly 83.5 million tires, valued at $4.4 billion, were imported last year.
“This deluge of unfairly traded imports hurt our domestic industry and workers, including many USW members,” Conway said in March. “Even though demand for PVLT tires increased, domestic producers were still forced to grapple with reduced market share, falling profits and lost jobs.”
The Commerce Department is set to announce a final determination in the currency manipulation case in March 2021. If the agency upholds the preliminary decision, the International Trade Commission is expected to make a final injury determination by the end of April.