...Case Analysis – U.S. Tariffs on Tire Imports from China Ramón Alejandro Lomas Iracheta BSM404 International Business Instructor: Dr. Carla Weaver May 24th, 2015 U.S. Tariffs on Tier Imports from China The decision of President Obama supported by the International Trade Commission of imposing a three year tariff to imports of tires from China has caused controversy. The United States Steelworkers argue that the tariff has brought benefits for them, which include more job capacity, increase in production and increase of sales. In the other hand, China called the tariff a “serious case of protectionism” due to the negative economic effects that imports of tires were causing to American employment and domestic production. China argues that while the tariff increases jobs in production sector, it also has a negative effect in jobs of sale sector, now some people who used to sell tires from overseas have lost their job. According to the Business Dictionary (2015) market disruption is “A decline in sales to the extent major economic hardships occur, such as one created by surge in imports at the expense of domestic industry” (p. 1). By following this definition, it can be assumed that the decrease of sales of American tires was caused by the amount of imports of Chinese tires. China is known for its ability of mass production at a low price, many companies opt for choosing China as supplier or workforce, but when it is not controlled, this could cause instability in the...
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...Week 4 Case Study Adam Careaga Shorter University BUS 6750 ONLH2 Bill Carson April 5, 2014 Chinese Tires In 2008, the United Sates imported 46 million tires from China, three times as many as it did in 2004. China’s share of the American market leaped from 5 percent to almost 17 percent over the same period, while U.S. employment in the tire industry fell by more than 5,000 jobs and domestic production slumped from 218 million tires to 160 million tires. The Chinese import was causing a market disruption and the U.S. implemented a three year tariff on imported tires. The tariff consisted of a 35 percent tariff for the first year followed by a 30 percent tariff the second year then a 25 percent tariff the final year. The tariffs were place on top of an existing 4 percent import tariff. (Hill, 2011) In the scheme of all the tariffs and arguments over the imports the better question would be who benefitted from this high tariff and who suffered? Tire imports from China show clearly why international economics is different. Consumers should be looking for good-quality products at low prices, but when their purchasing shifts toward more imports of foreign products, it can become a controversial political issue. National government officials have the power to enact policies that can limit international transactions like importing. If the whole world were one country, the issue of shifts in purchasing would be left to the marketplace. Within a country...
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...Ad valorem is a Latin word meaning “according to value”. A 100% ad valorem tariff on imports means that the government charges 100% on the assessed value of an imported item. If the assessed value of the item goes down then the cost of the tariff goes down; the tariff goes up if the assessed value of the item goes up. This tariff does not charge on the actual cost of the item but on the assessed value. The response from our firm depends on how large a share of the manufacturing industry it holds in Thailand, the moral stance of the firm, the efficiency of the research and development department, and the firm’s policy and ability to train or re-train workers. The United Nations Industrial Development Organization reported on Thailand in 2002. That report highlighted since 1998 the Thailand government started an Industrial Restructuring Plan (IRP) to pull Thailand out of its economic crisis. Focus of the plan included upgrading technologies; greater productive efficiency; a better-trained workforce that could match the technological development; and to develop stronger internal linkages and strategic alliances with external partners. If our firm has a fairly large share of the manufacturing industry in Thailand then we are in a position to try lobbying with the Thai government in an attempt to have them change their policy on international trade with the US, which restricts imports from the US. Since, according to the UN report, their government identified external partnership...
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...• What are tariffs? Ø A tariff is a tax or duty to be paid on a particular class of imports or exports. • China’s trade game • Background of the US tire industry Introduction • 20th April 2009 Ø American labor unions signed and filed a petition to the International Trade Commission requesting an investigation on the Chinese tire imports • Results from the investigation • 18th June 2009 Ø ITC and president Obama agreed on 3 years of years of duties on Chinese tires: q 35% in the first year q 30% in the second year q 25% in the thirds year Summary of the case: U.S. Actions • China’s appeal against U.S. tire tariffs • Tariffs imposed by China on U.S. imports Ø 105% Tariffs on U.S. Chickens (2010) Ø Substitute Airbus for Boeing ? Summary of the Case: China’s Retaliation ARGUMENTS FOR : ARGUMENTS AGAINST: ECONOMIC: • Protect the U.S. from unfair competition brought in by China • Protect tire industry workers in the U.S. • Stop dumping caused by low cost producers- China ECONOMIC: • Inflict economic damage on both countries • Loss of economic welfare (in the U.S.) Ø Higher prices Ø Lower consumer choice • Trade war POLITICAL REASONING : • One of the key reasons President Obama backed up the International Trade Commission was to keep the American labour unions content and gain their support during the elections. • Expected outcome of the protectionism policy applied Ø Predicted increase...
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...Page 1 Copyright (c) 2011 Suffolk University Suffolk Transnational Law Review Summer, 2011 Suffolk Transnational Law Review 34 Suffolk Transnat'l L. Rev. 403 LENGTH: 9744 words NOTE: UNITED STATES-CHINA TRADE WAR: SIGNS OF PROTECTIONISM IN A GLOBALIZED ECONOMY? NAME: Kara Loridas LEXISNEXIS SUMMARY: ... Among the aims of the Doha Development Round are a rejection of protectionism and an attempt to ensure fair application of trade rules to developing countries. ... China argued that the increased tariffs imposed by the United States on Chinese tires exceed the permissible maximum tariff rates that the United States may impose on Chinese imports. ... An example of effective negotiations is the settlement of the U.S. complaint alleging a Chinese violation of the national treatment concept by its preferential treatment of domestic products over "like" imported products. ... Cooperative trade relations between the United States and China are important to the global community because the economies of each country are dependent on the rest of the world and the global economy will be harmed by protectionist measures from the first and third largest trading powers. ... Moreover, multilateral negotiations, as opposed to bilateral trade negotiations, are better suited to resolve the United States-China trade disputes because the disputes affect other WTO members in ways beyond the immediate economic impact. ... The most effective way to combat the rapid escalation and retaliatory nature...
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...1. Explain three gains form trading internationally. International trade is made exchange product, service, and factor of product in different country or place. International trade also called word trade. It reflects that Countries in the world economy on the coexistence relationship. * to exploit comparative advantage 2. Providing a recent example, explain what is meant by free trade. Free Trade mean that state cancel constraints and obstacles on import and export trade, Cancel all kinds of preferential treatment and privileges of national import and export commodities，without interference and restrictions for Import and export commodities, let goods free import and export，Free competition in the domestic market of trade policies. For example: In April 7,chain with New Zealand concluded free trade agreements（FTA），this is first free trade agreement with developed countries. Now chain have building or discuss FTA have 12, involved 29 countries or place, cover 1/4 of chain total foreign trade. In 2007 Trade between the two countries reached 159.9 billion U.S. dollars. Expected in 2008, bilateral trade will reach 170 billion U.S. dollars，2010 get200 billion，5years later 2013 will get 250 billion. 3. Explain absolute and comparative advantage what is meant by free trade. Absolute advantage is said occur when one country can product a good or service to a pre-determined quality more cheaply than another country. Comparative advantage was first described...
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...rapidly since the 1990s. In recent years, China has become the world’s largest automotive producer, with annual vehicle output of over 18 million units in 2011. China is now also the world’s biggest market for automobile sales. Meanwhile, China’s auto sector development and policies have caused concerns in the United States, from automotive trade, China’s failure to effectively enforce trade agreements and laws, to market barriers and government policies that increasingly favor Chinese manufacturers, which could affect business operations and prospects of international companies doing business in (or with) China. China’s auto industry has developed extensively through foreign direct investment, which has come in the form of alliances and joint ventures between international automobile manufacturers and Chinese partners. These international automobile manufacturers, who generally dominate the higher end of the Chinese market, have focused on making cars for China’s large and fastgrowing market. The domestic Chinese automakers, who occupy the lower end of the market, struggle to improve design and quality to expand sales overseas. China exports and imports relatively few vehicles. Most of the cars produced in China stay in China and its vehicle exports are mostly light trucks and passenger cars shipped to developing country markets. Automotive trade between the United States and China has increased in recent years,...
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...threat to the defense, then it is wiser to not import those products. Protectionism, in this case, helps the domestic industries through trade restrictions to make sure that the supply for the products is abundant. 2) Counteracting Dumping Dumping is the economic policy where the company exports the products to the foreign market and sell them in lower price than in the domestic market or lower than the cost of production in order to establish monopoly and eliminate competitions. Sometimes foreign industries are subsidized by the country allowing those industries to charge at lower price in international trade. These companies would have an advantage over the ones not subsidized. So, the dumping should be retaliated through tariffs, quota and other trade restrictions 3) Protection of Infant and Domestic Industries Domestic and infant industries lack the competitive advantage over foreign mature industries. The situation then could create almost a hopeful situation for the domestic industries, not being able to compete with the market. So, to let the domestic industries flourish in the market, the country should protect the market through trade restriction. 4) Reduction of Trade Deficit Trade deficit is the situation when a country’s value of imports exceeds the value of exports. If a company is protected from the foreign market, then there is no import. This would reduce the trade deficit Rebuttals 1) National Security When the countries trade the...
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...Education is culture, and different educations show different societies’ culture. Americans regard education as the means by which the inequalities among individuals are to be erased and by which every desirable end is to be achieved. While Chinese education is for foundation education, but students may be not learn much. But all in all, different education systems account for the different phenomenon, because different society backgrounds and different culture helps human create a different country in the world. The different society structure plays an important part in the education system. In China, all those who can enter the University have received an elite education and before enrollment they have devoted themselves to hard studying. Therefore, they are good at getting high marks on mathematics, psychics and so on. However, they are lack of chances to practice skills in real world thus having no social experiences. In that case, after graduation, most students find it difficult to find a satisfactory job though many of them get a job through the relationship net. While in America, the education system pays more attention to social skills than to marks .Students have developed the ability to be independence in life and work. After university, they show great capability of thinking, innovation and creation which make them keep pace with the modern world. They are competent for the challenging work and can gain a good job in America with ease. There is a huge gap...
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...Flexibility for developing countries, in certain cases extra time allowed for adjustment or full adoption of the rules Embedded liberals tend to support international world trade and World Trade Organization and that free trade is a win-win situation, ‘rising tide lift all boats’. Free and fair trade is needed to grow the world economy and it benefits both rich capitalist as well as poor developing countries. Had WTO not been there, poor developing countries would never be able to stand up against rich capitalist countries. Any member country, rich or poor, which feels its domestic industries have been hurt by foreign imports can take their case to WTO for resolution.WTO also ensures that the member countries do not impose unilateral tariffs against others. Guidelines of WTO allow for flexibility for developing countries as the needs of these countries might...
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...The World Trade Organization (WTO) website defines itself as an organization as “born out of negotiations”. The WTO of today was created on January 1, 1995 and is comprised of 153 countries as of February 2011. The WTO’s mission statement centers around 3 agreements between its members: The General Agreement on Tariffs and Trade (GATT), the General Agreement on Trade in Services (GATS), and the Trade-Related Aspects of Intellectual Property Rights (TRIPS) (WTO, 2012). The WTO also serves the function of settling disputes between members and reviewing trade policy to ensure fairness and equity for all members. When our group chose this topic there were split in our opinions of whether the WTO should be abolished. There were sentiments among the group members that the negotiating style and methodology of the WTO was too cumbersome and bureaucratic to achieve decisions that were in the best interest of all parties involved. Other members of the group felt that the WTO is still a valid organization that offers small countries a voice when negotiating with larger more capable nations. The following narrative will outline the most compelling arguments for and against abolishment of the WTO. The negotiating style of the WTO is multilateral, which can be very time consuming and increase the difficulty for the parties involved to reach a deal. The nations involved in the negotiating have different interest while all parties have different productivity and limited resources. It...
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...Antidumping duties and measures laid by U.S.A Sailesh Patel 1226111126 ------------------------------------------------- Summary: On January 19, 2012, the Department of Commerce initiated antidumping (AD) and Countervailing (CVD) investigations of imports of large residential washers from Korea (AD/CVD) and Mexico (AD). The petitioner is Whirlpool Corporation. The U.S. International Trade Commission (ITC) is scheduled to make its preliminary injury determinations on or about February 13, 2012. If the ITC determines that there is a reasonable indication that imports from Korea and Mexico materially injure or threaten material injury to, the domestic industry, the investigations will continue, and Commerce will be scheduled to make its Countervailing duties and antidumping duties preliminary determinations in March and June 2012, respectively, unless extended. The U.S. government recently decided to no longer collect antidumping duties on imports of stainless steel sheet and strip in coils (SSSSC) from Germany, Italy and Mexico. This action follows from a recent vote of the U.S. International Trade Commission (ITC) in connection with a “sunset review” of existing antidumping duty orders on imports of SSSSC from these three countries, as well as from Japan, Korea and...
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...relationship between China and the US dates as far back as 1784 when the empress of China decided to open trade between the US and China. At that time the US had very few possessions to offer; however several hundred years later after several wars, changes in leadership, economic needs, and industrial revolutions a more in-depth trading relationship evolved. While the two countries need each other the relationship that they have is very complex. China relies on exports to the US to drive growth while the US requires investment from China to finance giant deficits. The two constantly spar over a range of sensitive issues. Most recently the US accused China of manipulating its currency to unfairly promote exports, the US government decided to place tariffs as...
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...business strategy Program: BBA (H) Section: a Assignment # 2 BATA: STRATEGIC CHOICES Submitted to: Mr. Ghulam Ahmad Rana Submitted by: Sohail Mazhar 083805013 Moeez Saleem 083805016 Umer Ashraf 083805027 Shahbaz Arshad 083805030 Zain fazal Ahmad 083805032 Furqan Tariq 083805046 Omer Sher 083805129 DATE: 26-03-12 BATA PAKISTAN LTD PAKISTAN FOOTWEAR INDUSTRY: ➢ Pakistan has a large footwear industry. It had a footwear market of above 150 million pairs per year. ➢ In Pakistan footwear industry can be divided into two sectors formal sector and informal sector ➢ Formal sector consist of about 500 small manufacturers, each producing from 500 to 40,000 pairs per day. Firms in this sector included giants such as Bata and servis ➢ Informal sector has the big market share of about 80 percent, was comprised of over 17,000 units, each with the average of two employees. ➢ Exports About dozen firms are involved in the exports but only Servis, Bata, Firhaj, Epcot. Shafi and Rajex participated regularly in the major annual footwear exhibitions in the Dusseldorf, Germany. ➢ Government Policy has big influence on the large players of the footwear industry through their import and export policies and duty rates. ➢ Sales Tax Small manufacturers prefer not to grow too large. They just want to remain under...
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...World Trade Organization: The art of a little give and take Historical Overview of the WTO The World Trade Organization (WTO) was founded in 1995 as the predecessor to the General Agreements on Tariffs and Trade (GATT). The GATT was developed in 1947 on a provisional base after World War 2; it was not started as an international organization, but rather an inter-governmental treaty. Instead of being made up of participating members, such as the WTO, the GATT consisted of contracting parties. As stated in the preamble of the GATT-1947, the objectives of the contracting parties include ‘raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand ,developing the full use of the resources of the world and expanding the production and exchange of goods’(GATT, 1994a: 486). It continues by stating that reciprocal and mutually advantageous arrangements involving a substantial reduction of tariffs and other barriers to trade as well as the elimination of discriminatory treatment in international trade will contribute to the realization of these objectives. So in short the role of the GATT, was (and still is) to facilitate the reduction of barriers of trade and ensure greater equality with respect to conditions of market access for contracting parties. Through the negotiations made by the original 23 countries of the GATT, with additions of over 50 countries, came the charter for the International Trade Organization...
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