Obama treads a difficult path with Chinese tyre tariffs

One aspect of the global trade recession in 2008-09 has been the resurgence of protectionist tendencies as countries have lined up to introduce fresh barriers to trade in goods and services. The pressures for import protectionism in the form of tariffs, quotas and other barriers is largely driven by politics and there is a new example to dissect with the news that the US government is to raise the import tariff on low-grade Chinese tyres following a petition filed by the United Steelworkers trade union, which represents workers at many US tyre factories. Chinese exporters will be subject to 35% import tariffs (taking effect on September 26th) which will decline to 30% in the second year and 25% in the third.

Here is some background on the dispute - drawn from articles in the Wall Street Journal, the Times and the Financial Times.

*Between 2004 and 2008, China’s tyre production capacity surged by 152% and is projected to jump an additional 16% by 2010.
*At 235.2 million tyres, China’s production capacity in 2008 was more than three times greater than its supply to its home market.
*US. imports of tyres from 2004 to 2008 jumped from 14.6 million to 46 million. China’s share of the U.S. tyre market increased to 16.7% from 4.7%.
*Four U.S. tyre plants closed in 2006 and 2007. There were 5,168 fewer workers in the U.S. tyre industry in 2008 than there were in 2004.
*US tyre manufacturers did not petition for higher tariffs - most have long since left the market for low-grade tyres for autos and other vehicles.
*The Chinese government claims that the tariffs will cost upwards of 100,000 jobs in China and perhaps 100,000 tyre-related jobs in America, including such sectors as imports, distribution and retail

Suggestions for background reading:

Times: Crunch time as Obama faces trade dilemma

China Daily: US tire tariff may cost 100,000 jobs in China

Economics Explained, by Evan [12 Feb 2012]
Unit 2 Macro: China’s Trade Engine is Spluttering [10 Feb 2012]
Unit 4 Macro: Focus on India - Comparative Advantage [27 Jan 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 4 Macro: Focus on India - Economic Growth [24 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 3 Micro: World’s Largest Solar Plant Opens [15 Jan 2012]
Unit 2 Macro: Look Upwards to Find the next Downturn [15 Jan 2012]
Unit 2 Macro: Frontier Markets - the New BRICS? [15 Jan 2012]
Beyond the Bike - The Importance of Remittances [15 Jan 2012]
China’s newest 5 year plan - and how it could change the world! [12 Jan 2012]
Unit 4 Macro: Economics of Fiscal Deficit Reduction [12 Jan 2012]
Unit 4 Macro: Competitive Advantage in Trade (Some Videos) [12 Jan 2012]
Unit 4 Macro: UK Trade Patterns [11 Jan 2012]
Unit 2 Macro: Factors Driving Business Investment [10 Jan 2012]
Unit 2 Macro: A Jobs Boost for the US Economy [8 Jan 2012]
Unit 1 Micro: Low Cost Airlines Beat the Recession [1 Jan 2012]
2011 in Review - The US Economy [27 Dec 2011]
Unit 2 Macro: The UK Housing Market in 2011 [26 Dec 2011]
Unit 2 Macro: Brazil Overtakes UK in Economic Size [26 Dec 2011]
Unit 3 Micro: Sub Normal Profits - BP Leaves the Solar Industry [21 Dec 2011]
Unit 4 Macro: The Rise in Self Employment [17 Dec 2011]
Unit 4 Macro: Does UK Manufacturing have a Future? [30 Nov 2011]
Where is the UK Economy? National Output [22 Nov 2011]
Jim O’Neill - The Growth Map: Economic Opportunity in the BRICs and Beyond [22 Nov 2011]
Beyond the Bike - The Value of Money [19 Nov 2011]
Unit 2 Macro: Should the EU introduce a Tobin Tax? [14 Nov 2011]
AS Macro: The State of British Business [13 Nov 2011]
Latest world trade data [6 Nov 2011]
Unit 2 Macro: Video Clips on Unemployment [6 Nov 2011]
Unit 4 Macro: China and India - Notes from Martin Wolf [6 Nov 2011]
Unit 3 Micro: Impulses to Change Management Models [5 Nov 2011]
Unit 3 Micro: Time of Use Pricing for Energy [2 Nov 2011]
Unit 4 Macro: Should TNCs make full disclosure on factory wages? [30 Oct 2011]
Trading Troubles [29 Oct 2011]
Unit 2 Macro: Positive and Negative Multiplier Effects [14 Oct 2011]
Can the “invisible hand” solve Africa’s poverty? [13 Oct 2011]
Unit 2 Macro: Can Exports Drive a Recovery? [13 Oct 2011]
UK Unemployment in October 2011 [12 Oct 2011]
Unit 4 Macro: Unit Labour Costs and Inflation [12 Oct 2011]
Skidelsky in Madrid [12 Oct 2011]
Unit 2 Macro: UK suffers a weak recovery [12 Oct 2011]
The Return of Protectionism? [12 Oct 2011]
Why Is Macroeconomics Such A Mess? [11 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: Greek Economy at Default’s Door [25 Sep 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 3 Micro: Fixed and Variable Costs [18 Sep 2011]
Unit 2 Macro: Economic Growth and Inequality [14 Sep 2011]
Unit 2 Macro: Income and Wealth in the UK [12 Sep 2011]
UK Macro: Risks of a Double Dip Recession [12 Sep 2011]
Mixing with the Nobel Economists [4 Sep 2011]
Toilet rolls, soap and climate change [1 Sep 2011]
Unit 4 Macro: Baltic Dry Index and Global Weakening [19 Aug 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]
What might happen on August 2nd? [12 Jul 2011]
Unit 1 Micro: Economics of Volatile Corn Prices [12 Jul 2011]
Unit 3 Micro: Motorsport Valley and External Economies of Scale [12 Jul 2011]
Unit 4 Macro: Dangers of High Inflation [11 Jul 2011]
Unit 2 Macro: Reducing Unemployment after a Recession [11 Jul 2011]
Protection of British jobs? [1 Jul 2011]
China: The End of Cheap Labour [28 Jun 2011]
UK firms wake up to Brazilian opportunities [21 Jun 2011]
Evan Davis ‘Made in Britain’ - and a new trade data tool to play with [21 Jun 2011]
AQA ECON4 Context [20 Jun 2011]
Six Global Trends Shaping Business Strategy [15 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]
A2 Macro: Consumer Spending [30 May 2011]
Invisible Exports - Originating Journalist is remembered [27 May 2011]
Do tariffs actually reduce imports? [26 May 2011]
Macro Revision: Putting Things in Context [25 May 2011]
AS Macro Key Term: Supply-Side Policies [25 May 2011]
AQA Macro: Remember to revise inflation [25 May 2011]
AS Macro Key Term: Demand Pull Inflation [24 May 2011]
AS Macro Key Term: Deflation [24 May 2011]
AS Macro Key Term: Trend Growth [23 May 2011]
AS Macro Key Term: Economic Recovery [23 May 2011]
AS Macro Key Term: Recession [23 May 2011]
AS Macro Key Term: Spare Capacity [23 May 2011]
AQA A2 Economics - European Context [23 May 2011]
AS Macro Key Term: The Output Gap [23 May 2011]

ECONOMICS TEACHER RESOURCE NEWSLETTER

Join over 6,000 other Economics Teachers in the UK and around the world who receive the tutor2u regular Economics Resource Email Newsletter. Get special offers, first news of latest resources, teaching ideas, conferences and workshops + loads of great ideas for teaching economics from our blog authors.