Premium Essay

Us Tariff on Chinese Tariffs

In: Business and Management

Submitted By 9992624
Words 683
Pages 3
• What are tariffs?
Ø A tariff is a tax or duty to be paid on a particular class of imports or exports.
• China’s trade game
• Background of the US tire industry

Introduction

• 20th April 2009
Ø American labor unions signed and filed a petition to the
International Trade Commission requesting an investigation on the
Chinese tire imports
• Results from the investigation
• 18th June 2009
Ø ITC and president Obama agreed on 3 years of years of duties on
Chinese tires: q 35% in the first year q 30% in the second year q 25% in the thirds year

Summary of the case: U.S.
Actions

• China’s appeal against U.S. tire tariffs
• Tariffs imposed by China on U.S. imports
Ø 105% Tariffs on U.S. Chickens (2010)
Ø Substitute Airbus for Boeing ?

Summary of the Case:
China’s Retaliation

ARGUMENTS FOR :

ARGUMENTS AGAINST:

ECONOMIC:
• Protect the U.S. from unfair competition brought in by China
• Protect tire industry workers in the
U.S.
• Stop dumping caused by low cost producers- China

ECONOMIC:
• Inflict economic damage on both countries • Loss of economic welfare (in the
U.S.)
Ø Higher prices
Ø Lower consumer choice
• Trade war

POLITICAL REASONING :
• One of the key reasons President Obama backed up the International Trade
Commission was to keep the American labour unions content and gain their support during the elections.

• Expected outcome of the protectionism policy applied
Ø Predicted increase of 1,200 jobs on the tire-manufacturing sector
Ø Theoretical expectation
• Actual outcome on consumers
Ø Higher prices for consumers q Prices of Chinese tire imports faced a 26% increase

• Actual outcome on the labour market
Ø President Obama “over a thousand Americans are working today because we stopped a surge in Chinese tires.”
Ø Vic Delorio “ This decision will...

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