Market Watch reports:
The Obama administration will impose stiff tariffs on imports of Chinese-made tires after finding that a surge of imports has disrupted the U.S. domestic market.
President Barack Obama signed an order on Friday to impose the special punitive tariffs for three years, the White House announced.
The action is the first major trade enforcement action of his presidency and comes less than two weeks before a high-profile summit of the leaders of the Group of 20 nations, including China.
This is a highly disappointing victory for protectionists. Henry Hazlitt gives a short yet accurate anecdote on one of the consequences of introducting tarriffs:
Suppose that in our country we import woolen sweaters from country A, and the sweaters sell for $25.
The local sweater industry petitions the government to impose, say, a $5 tariff (duty) on the imported sweaters. They argue that they cannot produce woolen sweaters for $25 and need this tariff in order to compete with country A. So, the government imposes a tariff.
As a result, the local sweater industry is able to employ many people. However, the consumers now pay $30 for the same quality sweater. The consumers no longer have that $5 to spend on other things. Thus the local sweater industry thrives, but a hundred other industries shrink.
You can see the sweater employees going to and from the factory each day, and you think, “The tariff was a good idea, it has given employment to people in our country.” But you don’t see the hundred other industries that have shrunk and all the lost jobs from that.
Click here for Professor Mark J. Perry’s “Simple Economic Analysis of the Tire Tariff: Americans Will Be Punished By the Punitive Tariffs.”
UPDATE: Responding to New Tire Tariff, China Targets American Auto Parts and Chicken Products