Chinese Tire Imports Hit With A 35% Tariff
Few economists would recommend raising import tariffs anytime, let alone in the middle of the worst economic downturn in 80 years. Last night, late enough to elude most media coverage, President Obama slapped a 35% tariff on Chinese tire imports. The Washington Post report was the first I saw.
Over the past five years, U.S. tire manufacturers have cut 5,000 jobs as China's U.S. market share tripled. The United Steelworkers petitioned the U.S. International Trade Commission on April 20, 2009 for relief under Section 421 of the Trade Act of 1974, which provides for "safeguards" against import surges. The June 2, 2009 hearing featured quite an array of witnesses, starting with members of Congress urging action. On June 29, the ITC recommended a 55% tariff in the first year, 45% in the second year, and 35% in the third year. President Obama had until September 17 to accept, reject, or modify the ITC's recommendation, and he chose to impose tariffs of 20% points less than the ITC recommended.
Adam Smith opposed tariffs in his The Wealth of Nations in 1776 because they made everyone except the protected industry worse off. As England's Commissioner of Customs, he had direct experience. The debate has raged ever since. This Economic Policy Institute testimony of June 16, 2009 offers counterarguments that China's currency manipulation, subsidies, and other unfair trade practices justify retaliation.
As much as I'd like the world to revolve around the best economic analysis, let's face it, politics trumps. President Obama won office last November with strong union support, and he can't tell 850,000 United Steelworkers they made a mistake. On March 5, 2002, President Bush, a very strong supporter of free trade, imposed tariffs of 8% to 30% on imported steel, so this is hardly a partisan issue. President Bush terminated his steel tariffs ahead of time on December 4, 2003. We'll see if the economy recovers enough to allow President Obama to do the same.
This is why people believe economists are idiots
Because Mr. Davis has decided to pretend that Chinese-made tires are wholly fungible with U.S.-made (and Mexican-made and French=made and German-made and Canadian-made and...) tires.
This despite the Chinese-made tires consistently failing safety inspections and including dangerous materials (previously banned from use by those other manufacturers) that have resulted in multiple recalls.
Ask the tire sellers down the road from me (in Union, NJ, that is) who have now almost gone out of business because they sold those Chinese-made tires and then had to deal with their recall and replacement whether the product is fungible.
Chinese-made tires have been demonstrated to be more dangerous than those Michelins and Goodyears and even Bridgestones (that's French, U.S., and Japanese-owned companies, iirc--not certain about Goodyear) made elsewhere.
There's a word for products that create problems that are not directly related to the transaction: externalities. According to economic research, there needs to be compensation for such.
Some economists appear to have forgotten about them; am saddened to discover this blog to be one of the places.
If Chinese tires are so
If Chinese tires are so dangerous as to put sellers out of business, then everyone would stop selling them and there would be no point to a tariff.
Chinese tire <> China-made
Chinese tire <> China-made tire
Chinese imports
Around 450,000 tires have been recalled since 2007 not to mention toothpaste with antifreeze and melamine in baby formula among many other products. But, how long before we see protestors with sign saying Hands Off my Communist Chinese Imports!?
Uneducated about Chinese Tires
While I am all for the healthy debate and discussion about chinese made tires i think that it is important that everyone understands that many manufacturers use Chinese plants to build tires. Some of the most popular tires on the road, sold by the largest retailers are made there. These tires are not limited to low cost "cheap" tires but also ultra premium products made by larger manufacturers. Oversight of the plants is up to each Manufacturer. Your aforementioned Michelin owns almost 10% of Hankook tire, one of the largest exporters of Chinese Tires to the U.S.
The average american consumer is the one who loses in this deal. The price of tires has ALREADY increased just from news of the Tariff.
Import
This is a tough problem. Adam Smith is a hero to many of us for his "capitalistic" approach to economics. You cannot go wrong accepting his premise on most issues. The big problem here is Obama being in bed with the unions. These unions appear to be his biggest backers right now while many others are falling off the bandwagon. He has to make concessions to them to keep them happy. Right now, the rest of us are stuck with his policies that seem to move us closer to socialism every day. It's been an interesting ride for the last 6 - 8 months, hasn't it?casino en ligne
Chinese Tires
Thanks to everyone for this spirited discussion. You all make excellent points.
I don't pretend any product is identical to its competitors, but I do believe, in most instances, consumers will respond to safety recall announcements and other quality information to differentiate their buying habits and thus the price.
Chinese Tires
Chinese products have killed our pets, made our children sick, and caused many an vehicular accident with their defective tires and valve stems.
Some people are just stupid and will continue to buy Chinese tires no matter how high the death/injury toll rises......just to save $10 a tire.
Chinese Tire Imports Hit With A 35% Tariff
This is a measure taken to protect local producers in the US. After all, the Chinese imported goods are everywhere, and their total value rises from year to year. Most of them are even of a bad quality.