Monday, September 14, 2009
Tarriffs Placed on Low-Cost Chinese Tires
A new duty of 35% was imposed on Chinese tire imports to protect US jobs and punish the low-cost producers of these tires. However, the costs of these tariffs will be born by low-income consumers in the US who purchase these products, and may cause shortages of tires in this market segment as retailers scramble to find news suppliers. These tariffs will also impact the two remaining domestic manufacturers Goodyear and Cooper since they make tires in China for import to the US. Cooper was on track to import 2.5 million tires this year, with a target of 4 million next year.
In addition, this tariff threatens a full blown trade war between the US and China. At a time when the world-wide economy is so weak and mutually cooperation so key to recovery is the the right action to take? Why would risk ticking off the Chinese now when earlier in the year we were practically begging them to keep buying our government debt?