Punitive Tariff Update: Costs vs. Benefits
CHINA VIEW -- Obama's decision came amidst enormous pressure from the United Steelworkers and other unions, which claim that tires imported from China have cost at least 5,000 American workers their jobs. However, the stiff 35% tariff, which will ultimately raise tire prices in the U.S., could affect 100,000 tire-related jobs in America, including such sectors as imports, distribution and retail.
The biggest hit would be felt by American consumers who now buy $50 Chinese-made tires and can't afford U.S. brands that cost as much as $150, many distributors warned.
MP: In other words, we're imposing a 35% punitive tariff on ourselves, and making thousands of American consumers worse off (especially the poor and middle class), along with making thousands of Americans with tire-related jobs worse off, possibly causing job losses. Those are the inevitable, significant costs of this trade protectionism, which will far outweigh the benefits to the U.S. domestic tire industry (as economic theory and empirical evidence of protectionism clearly show). But of course there's also a huge political payoff for Obama, who has bought union support for his health care plan by imposing huge costs on American tire consumers and workers in tire-related industries.