Monday, September 14, 2009

This Means War: China Hits Back over Tire Tariffs

It's officially a trade war.

Over the weekend we learned that the United States would impose three years of import tariffs on tires made in China--beginning at an eye-popping 35 percent. In an excellent article this morning, ConsumerAffairs notes that roughly 17 percent of tires sold in the US in 2008 had been made in China.

China is not taking this affront lying down; they are hitting back. Working on Sunday, the Chinese have introduced import tariffs of their own--on US-produced auto parts and chicken products.

Tariffs and other protectionist measures are not good. Yet we fail to learn this lesson. Today it is Chinese tires. In 2002 it was steel made in nations like Ukraine, Russia, Japan, China, and South Korea. You may not remember it, but way back in 1995, then-President Clinton proposed placing a 100-percent import tariff on Japanese luxury automobiles.

Trade wars--just like real ones--hurt people. And the collateral fallout is considerable, and rarely fully accounted for in advance. For example, I'm guessing that the already-staggering US auto parts workers aren't happy to know that (1) tires will cost more the next time they shop for them, and (2) their jobs are now at even greater risk because China slapped a retaliatory tariff on US auto parts.

Read more about the fallout for the US consumer at ConsumerAffairs.

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