Monday, September 14, 2009

Tariffs Punish Our Own Consumers and Producers

From the WSJ article "Tariff on Tires to Cost Consumers":

1. Consumers who buy low-price Chinese tires -- the bulk of the tires China exports to the U.S. -- will be hit hardest by the new tariff, as shortages in this market segment cause retailers to scramble to find alternative sources in other countries.

2. The tariffs won't just hit Chinese producers. Both of the U.S.'s remaining domestic manufacturers -- Goodyear Tire & Rubber Co. and Cooper Tire & Rubber Co. -- make tires in China that they sell in the U.S. Cooper this year is on track to import 2.5 million tires that it made in China. It was planning to boost that to four million next year.

MP: In other words, the "punitive tariffs" on the Chinese will actually punitively penalize our own American consumers, especially poor and middle-class, the largest buyers of low-price Chinese tires, and we'll also punitively punish two of our own Ohio-based tire companies, which combined employ more than 88,000 full-time employees, many in the U.S.


At 9/14/2009 3:51 PM, Blogger misterjosh said...

Don't forget the car parts & chicken producers who export to China. They're being harmed as well.

'course I can understand China being irritated by the chicken folks - aren't they're subsidized by cheap corn and other USDA programs? On the other hand, American taxpayers are essentially giving free chicken to China, so maybe they shouldn't mind it after all.

There's a Barenaked Ladies song in there somewhere.

At 9/14/2009 4:53 PM, Blogger sethstorm said...

They should have known the risk. Naturally, they'll have to find a country that is more tolerated by US consumers. That is, they can't expect much different results if they move to another country w/ similar issues (say, Vietnam for example).

What says they can't sell them in that country to final end users of those tires? There would at least should be a supply of cars that can take those tires over there w/o incurring a loss.

Besides, what particular lines are being made there (and wherever the production resumes)?

At 9/14/2009 5:28 PM, Anonymous Anonymous said...

The Chinese safety issue is because of some cost minimizing damn the safety decisions of Chinese businessmen in tires (see NYT) dried milk, pharma, and toys perhaps we need to change to a mandatory inspection on entry regime. Alternatively Chinese mfgs need to put a deposit with the USG government to import that is refunded if after the statue of limitations expires on lawsuits. If a lawsuit is filed it gets paid thru the deposit. Then the mfg is incented to make things safe to get the deposit back.
The issue here is that the consumer can't tell in a lot of these items about safety.
These are issues that the US confronted in the 1890s to 1920s.

At 9/14/2009 5:55 PM, Blogger sethstorm said...

Anonymous 5:28pm :

How do you get them so that they can't just game it?

At 9/14/2009 9:20 PM, Blogger juandos said...

Hey sethstorm and anon, does the phrase 'caveat emptor' mean anything at all to either of you?

At 9/14/2009 10:17 PM, Anonymous Anonymous said...

To answer 1 how do you tell a tire is safe if it says it meets standards as a consumer? How do you tell if pet food is safe, do you have to test everthing in your own library. Cavet Emptor has a problem in our complex society where other than knowing who you are buying from its hard to know a lot in many cases. In the tire case the importer did not know (or perhaps want to know) that the change had been made.
The pet food was done thru a terribly complex supply chain, so one way (all be it a regulation base way) would be to require companies to post their entire supply chain on the web, i.e. you type in a product id and a lot number and it says part a came from x who got parts from y and z etc. Thats the only way it could possibly work, and given that companies don't even know more than 2 links back very difficult.

At 9/15/2009 4:20 PM, Blogger sethstorm said...

Hey sethstorm and anon, does the phrase 'caveat emptor' mean anything at all to either of you?

What part of "continuing problem with China that nullifies any chance of caveat emptor" do you not understand?


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