1. What are the political and economic argument supporting the tariff on Chinese
ID: 390309 • Letter: 1
Question
1. What are the political and economic argument supporting the tariff on Chinese tire imports, if any?
2. What stakeholder groups are affected by the tariff? Think of the importing country (US), exporting country (China), producers, consumers, and related industry such as car producers, tire shops, etc.
3. Among the stakeholder groups, who benefit from the tariff? Who lose from the tariff?
4. Will the tariff help increase employment in US tire manufacturing industry? Why and why not?
5. What can Chinese tire exporters do to reduce the impact of tariff? (Optional)
Explanation / Answer
40 percent of the tire market in US is captured by imports from China. This is a humongous number and signifies the US dependency on Chinese imports. The import had gained ground particularly because the Trump administration believed the China was resorting to ‘Dumping’ as a means to profit from its exports. The US calls its action as Anti-Dumping in order to thwart the Chinese traders and jack the import duty to as high as 25%.
Tire companies in the US
Tire companies in China
Investors in US
Investors in China
Investors world over in Chinese and US companies, particularly of the tire industry
Automotive manufacturers
Vendors contributing to the manufacture of tire, like natural latex vendors and also vendors contributing to the products dependent on the production of tires
Banks which have lent loans to the tire companies
Governments of China and the US.
The local tire companies in the US will benefit as the competition would reduce. Chinese tire manufacturers would have a major avenue of US buyers being diminished.
It would increase the employment because the demand which would otherwise have been satisfied by Chinese manufacturers will now have to be met by US manufacturers which will require more people to be deployed in jobs.
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