Bloomberg.com is reporting that President Obama has imposed a tariff on tires imported from China. The United Steelworkers union had asked for the tariff, claiming that the increasing number of tires imported from China were costing US jobs. The amount of tires imported into America from China has tripled between 2004 and 2008.
China is not happy about the tariff, and has indicated that they may place some tariffs on American goods to retaliate. According to the article:
"Chinese industries complain that they're being hurt by "unfair" U.S. trade practices, the nation's Ministry of Commerce said on its Web site yesterday. The Beijing-based ministry is probing complaints about U.S. subsidies for auto and chicken products, a spokesman said today. The agency is also probing the alleged dumping of the chicken products, he said.
"The U.S. decision on tires violated rules of the WTO and is a breach of the commitments made by the U.S. at the Group of 20 summits, the ministry said Sept. 12. The move will harm both countries' interests and produce a chain reaction of trade protectionism, slowing world economic recovery, it added."
The G-20 summit meets in Pittsburgh next week, so President Obama will see Chinese President Hu Jintao there.
Tariffs historically have not generally been a positive thing. The Smoot-Hawley Tariff of the 1930's started a trade war. The US Department of State writes on its website that world trade declined after the tariff was enacted.
There is a lot of room for change in our trade policies with China. We have had some serious problems with pet food, baby food, and children's toys. It is also difficult to compete in the world market with a country who severely underpays its labor pool (and probably uses children and prisoners to manufacture some goods). I'm just not sure a tariff on tires is going to help.
Leave a comment