Friday, September 11, 2009

Punitive Tariffs Are On Americans, NOT the Chinese

WASHINGTON (AP) -- President Barack Obama has slapped punitive tariffs on all car and light truck tires entering the United States from China in a decision that could anger the strategically important Asian powerhouse but placate union supporters important to his health care push at home. The federal trade panel recommended a 55 percent tariff in the first year, 45 percent in the second year and 35 percent in the third year. Obama settled on slightly lower penalties -- an extra 35 percent in the first year, 30 percent in the second, and 25 percent in the third.

Translation: President Barack Obama has slapped punitive 35% TAXES on AMERICAN CONSUMERS (including the poor and middle-class) for all car and light truck tires VOLUNTARILY PURCHASED from Chinese producers, in a decision that could anger the strategically important Asian powerhouse but placate ANTI-AMERICAN CONSUMER union supporters important to his health care push at home.

17 Comments:

At 9/11/2009 10:11 PM, Anonymous gettingrational said...

Does the confiscation of over two trillion U.S. dollars that were meant for two-way trade make China a strategic partner?

 
At 9/11/2009 10:49 PM, Anonymous Anonymous said...

Alexander Hamilton versus Thomas Jeffersonor John Quincy Adams vs John C Calhoun. As at those times the issue is the number who benefit swak louder than the larger number who loose. It has always been thus. Historically the only exception was Britain in the late 19th century post repeal of the corn law, and by the early twentieth century demands for protectionism back in Britain.

 
At 9/11/2009 11:00 PM, Anonymous Six Ounces said...

Smoot-Hawley.

 
At 9/12/2009 12:05 AM, Blogger Thai said...

If the taxpayers of another country want to stupidly subsidize American consumers- LET THEM!!!!!

I could understand if they were the only other suppliers out there and not other nation on earth was ready to take up their slack, but everyone on earth wants to do the same thing.

If the Chinese want to subsidize Americans, why should we prevent them from their own stupidity?

 
At 9/12/2009 12:51 AM, Blogger Michael said...

My beef with the Chinese is that they can sell fraudulent products in America. Many products from China labeled stainless steel or solid brass are nothing more than scrap pot metal plated with chrome to create "stainless steel" or copper to create "brass".

A US made stainless grill is $800. A Chinese made stainless grill is $200. The US made grill has to be made out of stainless steel. The Chinese are free to make the grill from any material they have at hand and get to sell it in the US as stainless.

I don't like the tire tax, but when China sends a product to the US, it should be made of the materials on the label.

I wonder if MP has a comment on this fraud.

 
At 9/12/2009 1:05 AM, Anonymous Anonymous said...

MP, great job once again in pointing out who really loses in this situation, all U.S. consumers. This is yet another bad decision that needs to be reversed.

The more competition the better. If they have a bad product, then no one has to buy it. Plain and simple.

 
At 9/12/2009 1:09 AM, Blogger Michael said...

As a side note, I worked at Home Depot. They used to get their gas line pipe from South Korea. The company went with cheaper pipe from China. The steel is of such low quality that I wouldn't sell it to customers. There are many products that the big box home stores sell that I would rate as unsafe to have in the home. But HD has paid Washington politicians off to allow the company to import products that were once banned as being unsafe.

 
At 9/12/2009 5:53 AM, Blogger threecollie said...

The safety issue is a big one. A level economic playing field is a fine thing for consumers, but as onerous as our regulatory system of inspections is, it helps protect us from some bad stuff here in the USA.
It is easy to say let the buyer beware in terms of the quality of imported products, but as the pet food/melamine scandal proved, there are some products the consumer can't judge for themselves until it is too late. Nothing on the poisoned pet food said it contained ingredients from China. Due to the mixing of ingredients, in foods in particular, and the impossibility of labeling the origin of every ingredient in, for example, cake mix, consumers are very vulnerable to foods that might contain tainted imported products.
This has been seen in the USA already, with the tainted pet food and with deadly puffer fish, imported from China, labeled as harmless monk fish, which sickened people in Chicago in 2007.
Only a tiny percentage of imported food ingredients is inspected before it enters this country. Free trade is fine, but safe trade would be kinda nice too.

 
At 9/12/2009 10:21 AM, Anonymous Anonymous said...

The European Coal and Steel Community (ECSC) was a six-nation international organisation serving to unify Western Europe during the Cold War. Studies have shown that the elimination of tariffs between the countries resulted in more trade, more employment and higher incomes. I suggest the Obama administration hire someone to teach them economics. Obama comments about demagoguery the other night was prophetic..

 
At 9/12/2009 1:13 PM, Anonymous Anonymous said...

As I recall, once upon a time, Firestone made a lot of unsafe tires. I didn't hear any economists objecting then...

 
At 9/12/2009 1:42 PM, Blogger OA said...

I have a big problem with using safety or quality concerns to justify a tariff. If there's a safety concern, then deal with the safety concern. And if there's a quality concern, that's up to people to decide if the difference in price is worth taking a chance.

The lead paint and melamine issues were not a matter of consumers "judging" for themselves. Those were illegal and were a detection problem on the part of companies who subcontracted or purchased ingredients.

Remember the Firestone tire problems from 2000? Ford stopped putting them on their SUVs. Should other countries have slapped an import tariff on American wheat because of the shoddy American tires?

The auto companies themselves show what can happen from high tariffs. The tarriffs and threatened tariffs on Japanese cars encouraged them to make larger cars. So instead of building small economy cars, they moved to mid-sized cars and to luxury cars. Yes, they built plants in the US, but is that what the tariffs were intended to do?

 
At 9/12/2009 4:32 PM, Anonymous Six Ounces said...

Ah, the old "safety" Red Herring, as if American producers have a sterling track record.

Then there are the tires lined with Kevlar, as if because the material can be fashioned to stop bullets it will make a tire puncture resistant. It reminds me of the old Chrysler Cordoba commercials where Ricardo Montalban praised the fine "Corinthian leather", a term Chrysler invented for the commercial.

Ultimately, caveat emptor must prevail. Consumers should worry about the quality that comes with low price. Consumer Reports even does the work for you!

The "subsidy" argument doesn't hold water either. It presumes it can drive all or most other competitors out of business. American and European tire manufacturers already have considerable market power, so the international competition forces them toward more competitive pricing and production (oh, and wages and employment). Does anyone recall how much extra we paid when the Big Three were the only players in the auto market? The union wages and protectionist costs to the consumer were roughly 50% of the price of the car!

 
At 9/12/2009 4:50 PM, Blogger 1 said...

"As I recall, once upon a time, Firestone made a lot of unsafe tires. I didn't hear any economists objecting then..."...

Hmmm, considering the time frame where would you have heard what economists thought about the supposed unsafe Firestone tires?

 
At 9/14/2009 12:48 AM, Blogger sethstorm said...

This comment has been removed by the author.

 
At 9/14/2009 12:59 AM, Blogger sethstorm said...


a decision that could anger the strategically important Asian powerhouse

That's a sign that we're doing the right thing. It is a message to the Third World that they do not set the tone, that we do. I'd say keep on going and prepare to deal with any economic threats they continue to bring to the table. They should be penalized for their misconduct and deception.

Thankfully they have more to lose and should start learning not to try to conquer the US economically. One repudiation may affect us greatly, but they stand to lose more from any vengeance.

It is hardly anti-consumer when you remove goods that have defects; the nation and others like China (Vietnam, Thailand, Malaysia, HK SAR, Brazil, Mexico) that do nothing to increase
quality.

The folks who are anti-American are the ones who facilitate the direct/non-diffuse decisions of moving work and product design away from the US and the developed world.

Voluntary purchase in your mind is all but an academic definition.

 
At 9/14/2009 1:06 AM, Blogger sethstorm said...


Ultimately, caveat emptor must prevail. Consumers should worry about the quality that comes with low price.

It doesn't. They just flood the market until they're the only game in town.


The auto companies themselves show what can happen from high tariffs. The tariffs and threatened tariffs on Japanese cars encouraged them to make larger cars. So instead of building small economy cars, they moved to mid-sized cars and to luxury cars.

Both of which are underpowered, thanks to the aftereffects of a gentleman's agreement to limit the horsepower of a Japanese car. Perhaps they should have taken a page from Detroit and continued to build muscle.

 
At 9/14/2009 1:08 AM, Blogger sethstorm said...


The European Coal and Steel Community (ECSC) was a six-nation international organisation serving to unify Western Europe during the Cold War. Studies have shown that the elimination of tariffs between the countries resulted in more trade, more employment and higher incomes.

That was before they had a developing world to threaten them.

 

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