Archive for August, 2010

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August 16, 2010 Leave a comment
Categories: International Trade

Non tariff barriers

August 2, 2010 Leave a comment

Besides tariffs that restrict international trade. There are non tariff barriers which have gained a significant importance as a measure of protection for USA and other industrialized countries. Non tariff trade barriers include practices as quotas, domestic content requirements, subsidies, antidumping duties and many other practices.

An example of a non tariff barrier is the levying of an additional 35% tariff on tires imported from China to USA that took effect last September. The United Steelworkers Union, that represents US tire workers, pushed the president Obama to impose taxes on Chinese tires by arguing that many American tire factories have closed between 2006 and 2007, and many more are going to close this year.

China, in retaliation, has threatened USA to cut off imports on American chicken if they impose taxes on their tires. While some American poultry experts doubt what China has said by considering in it an empty threat.

Imposing taxes on Chinese tires seems a wrong step taken by U.S government. American executives and law makers ignore the fact that protecting a specific industry can harm another one.

I think USA should reconsider its decision about levying taxes on Chinese tires and should be concerned about China`s threat in which USA can lose the largest market of their chicken in order to protect its local tire manufacturers. In addition, USA should try to improve its relationships with China since this latter is considered the largest buyer of its treasury bonds.

You may argue that USA should levy this additional tax, because they are hurting local manufacturers. However, imposing taxes on Chinese tires would raise import prices, which would lead local manufacturers to raise their prices resulting in an increase of profit for them, but higher prices for the consumer.

Written by: Redouane Boufous

Categories: International Trade