Do tariffs actually reduce imports?

The answers is yes and no! In 2005 the US government slapped anti-dumping tariffs on the imports of Chinese furniture. At the time, imports accounted for 58% of the market for beds and similar items.

What happened next was probably not in the plans of US lawmakers and the local furniture manufacturers who supported the tariffs. Although imports from China did fall sharply, a number of Chinese manufacturers moved their plants to different countries, Vietnam being the main choice. The result was that as of 2010, imports now account for 70% of the total market!

The full story, including some insightful comments from a Chinese furniture manufacturer can be seen in this Washington Post article.

Rather depressingly, the article reveals a problem that often occurs with government intervention…. “The only Americans getting more work as a result of the tariffs are Washington lawyers, who have been hired by both U.S. and Chinese companies. Their work includes haggling each year over private “settlement” payments that Chinese manufacturers denounce as a “protection racket.”

Fearful of having their tariff rates jacked up, many Chinese furniture makers pay cash to their American competitors, who have the right to ask the Commerce Department to review the duties of individual companies. Those who cough up get dropped from the review list.”

Unit 2 Macro: The Output Gap [20 May 2012]
Made in China - but not quite so cheaply…... [7 May 2012]
F585: Recent Articles of Relevance [6 May 2012]
Unit 2 Macro: Growth and Development Glossary [5 May 2012]
Unit 2 Macro: Trade and Balance of Payments Glossary [5 May 2012]
Unit 3 Micro: The Third Industrial Revolution [20 Apr 2012]
Unit 2 Macro: Globalisation and the Growth of Ports [10 Apr 2012]
Unit 4 Macro: Productivity Improvements in China [3 Apr 2012]
Global Economy- the 2012 BRICS Summit [28 Mar 2012]
Life in the Slow Lane - UK Growth in 2011 Lags the Euro Area [28 Mar 2012]
OCR A2 Economics Unit F585 The Global Economy June 2012 [27 Mar 2012]
Free Trade Agreements [25 Mar 2012]
Solar Panels and Tariffs [21 Mar 2012]
Evidence of the dangers of protectionism [9 Mar 2012]
Unit 3 Micro: Volkswagen targets growth markets [25 Feb 2012]
Unit 2 Macro: Rosling on China and the UK Converging [24 Feb 2012]
Unit 2 Macro: China’s Trade Engine is Spluttering [10 Feb 2012]
Unit 2 Macro: Focus on China - Trade and Growth [27 Jan 2012]
Unit 2 Macro: Focus on China - Inflation [26 Jan 2012]
Unit 2 Macro: Focus on China - Carbon Emissions and Growth [26 Jan 2012]
Unit 2 Macro: Focus on China - Per Capita Incomes [26 Jan 2012]
Unit 2 Macro: Focus on China - Changing Economic Structure [26 Jan 2012]
Unit 2 Macro: Can China Stay Competitive [25 Jan 2012]
Unit 2 Macro: Population Shift in China [23 Jan 2012]
Unit 2 Macro: Exporting to the Booming Chinese Economy [23 Jan 2012]
Unit 4 Macro: Money, Debt and the New World Order [22 Jan 2012]
Unit 4 Macro: Russia Joins the WTO [22 Jan 2012]
Unit 2 Macro: Videos on Productivity [17 Jan 2012]
Unit 2 Macro: Look Upwards to Find the next Downturn [15 Jan 2012]
China’s newest 5 year plan - and how it could change the world! [12 Jan 2012]
Unit 2 Macro: Brazil Overtakes UK in Economic Size [26 Dec 2011]
Jim O’Neill - The Growth Map: Economic Opportunity in the BRICs and Beyond [22 Nov 2011]
AS Macro: The State of British Business [13 Nov 2011]
Latest world trade data [6 Nov 2011]
Unit 4 Macro: China and India - Notes from Martin Wolf [6 Nov 2011]
Unit 4 Macro: Should TNCs make full disclosure on factory wages? [30 Oct 2011]
Trading Troubles [29 Oct 2011]
Can the “invisible hand” solve Africa’s poverty? [13 Oct 2011]
The Return of Protectionism? [12 Oct 2011]
Unit 4 Macro: USA edges closer to naming China as a “Currency Manipulator” [4 Oct 2011]
Unit 4 Macro: Protectionism [3 Oct 2011]
Unit 4 Macro: When China Met Africa [1 Oct 2011]
Unit 4 Macro: IMF Flags up Risks of Double Dip [20 Sep 2011]
Unit 4 Macro: Bangladesh and Comparative Advantage in Textiles [19 Sep 2011]
Unit 2 Macro: Economic Growth and Inequality [14 Sep 2011]
Toilet rolls, soap and climate change [1 Sep 2011]
Unit 4 Macro: GDP per person since the credit crunch [19 Aug 2011]
Guess where China exports its chopsticks from [7 Aug 2011]
Capital labour substitution at FoxConn [2 Aug 2011]
A surprising example of trade between the USA, China, and Korea. [19 Jul 2011]
Unit 1 Micro: Cotton Prices and the Retail Price of Clothing [13 Jul 2011]
Harry Potter shows that China isn’t quite a market economy yet! [13 Jul 2011]
Unit 1 Micro: Economics of Volatile Corn Prices [12 Jul 2011]
Protection of British jobs? [1 Jul 2011]
China: The End of Cheap Labour [28 Jun 2011]
AQA ECON4 Context [20 Jun 2011]
Do you agree that the government should provide support to the UK car industry? [12 Jun 2011]
Chinese inward investment in the London property market [12 Jun 2011]
Development Econ: Wealth and Inequality in China [10 Jun 2011]
Unit 3 Micro: Monopsony Power in Markets [19 May 2011]
AS Micro: What´s really behind the oil price rise? [10 May 2011]
A2 Macro: Chinese investment in the EU [3 May 2011]
Video Clips on the Chinese Economy [1 May 2011]
Consequences of One Child Policy Play Out [30 Apr 2011]
AS and A2 Macro Revision: The China Effect [26 Apr 2011]
China set to become exporter of inflation [14 Apr 2011]
Progress towards low carbon economic growth [18 Mar 2011]
Timetric: UK Balance of Trade with China [13 Mar 2011]
Dambisa Moyo - How the West was Lost [11 Mar 2011]
Chinese and Indian Railways - Importance of Infrastructure [25 Feb 2011]
EU Economics: Germany leads Euro Zone revival [25 Feb 2011]
Protectionism and the demise of the US shipping industry [24 Feb 2011]
Combining monetary and fiscal policy to curb inflation in China [16 Feb 2011]
The US-China Trade Deficit [14 Feb 2011]
China and Africa - Resources on their relationship [14 Feb 2011]
Economics Q&A: What factors help to explain rising food prices? [14 Feb 2011]
Mo Tanweer on Global Currency Wars [10 Feb 2011]
Tuesday Talks! African development [8 Feb 2011]
The 25 Countries Whose Governments Could Get Crushed By Food Price Inflation [5 Feb 2011]
The Chinese are coming! [5 Feb 2011]
Globalisation - Peering into the MIST? [1 Feb 2011]
The US-China power balance, trade and currencies [22 Jan 2011]
Economics Q&A: Tragedy of the Commons and Market Failure [18 Jan 2011]
Roger Harrabin - Environmental Economics Videos [17 Jan 2011]
Chinese exports mini-fact [4 Jan 2011]
China limits rare earth exports [30 Dec 2010]
Beijing City lifts their minimum wage by 21% [29 Dec 2010]
OCR A2 Economics F585 (Feb 2011) - Suggested Reading [7 Dec 2010]
EU has to reduce its import barriers [4 Dec 2010]
Time for the EAGLES to fly? [15 Nov 2010]
A Hip Hop Take on Currency Wars [14 Nov 2010]
Widening wealth gap in China [5 Nov 2010]
John Humphrys in China [4 Nov 2010]
Extend and Enrich with EconoMax [29 Oct 2010]
Risks of over-capacity in Chinese car making [17 Oct 2010]
Tea with the Economist - Stephen King [13 Oct 2010]
Here we go again - high tariffs and currency wars [9 Oct 2010]
Poor countries or poor people? [4 Oct 2010]
Currency wars [27 Sep 2010]
Are the Chinese to blame for rising wine prices? [20 Sep 2010]

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