Case Analysis – U.S. Tariffs on Tire Imports from China

Ramón Alejandro Lomas Iracheta
BSM404 International Business
Instructor: Dr. Carla Weaver
May 24th, 2015

U.S. Tariffs on Tier Imports from China
The decision of President Obama supported by the International Trade Commission of imposing a three year tariff to imports of tires from China has caused controversy. The United States Steelworkers argue that the tariff has brought benefits for them, which include more job capacity, increase in production and increase of sales. In the other hand, China called the tariff a “serious case of protectionism” due to the negative economic effects that imports of tires were causing to American employment and domestic production. China argues that while the tariff increases jobs in production sector, it also has a negative effect in jobs of sale sector, now some people who used to sell tires from overseas have lost their job.
According to the Business Dictionary (2015) market disruption is “A decline in sales to the extent major economic hardships occur, such as one created by surge in imports at the expense of domestic industry” (p. 1). By following this definition, it can be assumed that the decrease of sales of American tires was caused by the amount of imports of Chinese tires.
China is known for its ability of mass production at a low price, many companies opt for choosing China as supplier or workforce, but when it is not controlled, this could cause instability in the economy of a country. In one side, the company saves money for outsourcing in China, and so it can offers products at a lower price than competitors, the problem lays in the fact that some competitors are local companies that employs citizens which at the same time pay taxes to government and are directly affected for the amount of imports.
In the side of China, it gets more benefits when it