Tariffs on Chinese Tire Imports and the Consequences?
Recently the Obama administration mandated higher tariffs (35%) on Chinese built-consumer tires. So what are the consequences? Well, let’s see…the United Steel Workers are happy, tire dealers and distributors are unhappy and the rest of the business world should take notice. Anyone up for a trade war with China?
The winner is, I believe, a small protectionist group that helped get Obama elected. The losers are many:
– Small businesses who sell low priced tires to a market niche.
– Employees who will lose their jobs.
– Importers who have to make big changes to their business models.
– Distributors who have spent years building their businesses in this market.
– THE CONSUMER- as always the costs will be passed on to the consumer via higher prices.
The tire industry will certainly adjust over time. Countries such as Vietnam, India and Thailand will fill the gap with low cost import tires and new distribution channels will be created.
So what has been solved with this higher tariff? You tell me. Will it create new jobs in the U.S.? I don’t think so. Most of the major tire manufacturers are focused on producing premium priced, higher profit margin tires. They stopped producing low priced, entry level tires years ago. Will it end with tires? I think it’s a slippery slope. Already the Chinese are talking about tariffs on chicken.
Shortsighted policies like this seem to lead to larger problems down the road…we will see.
What are your thoughts on this subject? Please leave a comment below.
Have a great week!
Brian
It is a double edged sword… I own a tire business and have felt the burn from this tariff. It makes my cost of doing business go up, and that in turn makes me not want to have as many employees. I cannot believe that this administration says it is looking out for the “little guys” when it is doing everything in it’s power to hinder their survival. I feel like the change that was promised is not in business owner’s best interests. I love being able to have a good selection of tires to choose from for my customers; but with this tariff makes it so that their is not a low grade tires to choose from. I feel like this tariff is just another thing to make the Chinese hate doing business with the US.
Tire Guy,
Totally agree with you. Just wait for health care…hold on to your wallet!
Tire Guy,
I’m afraid in the near future we will see more signs of the coming trade war with China!
I get your point with less selection of cheap (junk, chinese,wal mart…) tires but, if people want cheap tires, by recaps or if they’d spend a few extra dollars, and buy an American made tire, assembled by American workers, they’d 1:See the difference in quality. Good tires last longer.
2: Keep an American in a job.
If you want to put Americans out of work, buy chinese tires at big box mart and see what happens to the local tire shop.
On another note, if the government can’t even get a vehicle trade in program right (billions over budget and more sales of foreign cars than domestics) Why would you want them to “fix” health care.
I personally think it is a good idea. I have sold some of the chinese tractor tires and they are JUNK.
Why should we let the chinese flood our markets with inferior products. They will have the last laugh soon while we are all trying to unhook the kids toys from the packageing. The only way the american economy will improve is if we support it.