tires3.gifChina is responsible for more than half of the US trade deficit and a big chunk of US job losses, or at least that is what the United Steelworkers (USW) trade union thinks.

The USW argues that US manufacturing will continue to be displaced by Chinese imports while “trade laws guarding against dumping and illegal subsidies are ignored.”

USW recently filed a trade case with the International Trade Commission asking it to stem the tide of cheap Made-in-China tyres into the US market, which is crippling US tyre manufacturers, according to the union.

“Until unfair trade practices in China are stopped, including adjusting the exchange rate to reflect market conditions, we'll never have balanced trade that benefits both American workers and businesses,” said USW president Leo Gerard.

History shows that these sort of protectionist measures are difficult to justify and even more difficult to enforce. The EU's 2006 decision to raise tariffs on Chinese shoe producers was bitterly opposed by some EU countries that argued it would hurt poorer consumers, while China argued that the measures were unfair.

Indeed, data collected by the EU did not support the popular perception that the Chinese were engaged in unfair competition. Consumers prices of shoes actually remained static during the period 2001-2005, while the import price that distributors paid to Chinese manufacturers dropped 27 per cent over the same period.

The EU concluded that the import price made up a small proportion of the price that the consumer paid, with the lion's share coming from the markups that middlemen charged once the shoes arrived in the EU.

The US imports 98% of its shoes so this is a battle that the US shoe industry lost long ago. If the US tyre-making industry were to go the same way, I suspect that few American consumers would shed too many tears.

Like it or not, tyre-making is simply not a strategic sector for an post-industrial economy. Did you ever hear Obama promises to make the US a world leader in car tyres?

In 2007, a batch of Made-in-China tyres were the subject of safety scare in the US. The difficulties in identifying and organising their recall showed just how pervasive Chinese tyres had become in the US market.

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