AssignmentOverview of U.S Imposition of Tariff on Chinese Tire Imports

Memorandum
Student’s Name
Institution
MEMORANDUM
TO: The CEO
FROM: Global Manager
DATE: 31/01/2021
SUBJECT: Overview of U.S Imposition of Tariff on Chinese Tire Imports
Over the past few decades, a lot has happened in the global trade environment. The developments have impacted domestic and international politics, foreign and trade policies, while reshaping the international financial markets. Different U.S. administrations have had to impose some stringent measures to safeguard the interests of their citizens while maintaining the economic and political sovereignty against other nations. China’s ambitious and steady rise of exports to the U.S. market threatens the domestic production companies. This memo takes a critical analysis of the events that occurred during the early years of President Obama’s administration and the dire consequences it had on the tire production industries.
The case points out some interesting events that preceded the imposition of the stringent import tariff on Chinese tires by the U.S. government (215). President Obama bowed to the pressure of the Steelworkers Union and was convinced that the flooding of U.S. markets with cheap Chinese tires had caused enough market disruption, and was left with no other choice but to impose eminent tariffs on tires that ran for three years (Hill, 2014). The Chinese government sought the intervention of the World Trade Organization (WTO), claiming that the tariffs infringed on the rules that both countries had subscribed to. The WTO sustained the tariffs, asserting that the U.S. domestic companies were entitled to special safeguards as outlined by the WTO provisions. The tariffs on Chinese products opened the door for low-cost and low-quality products from other competing nations to the U.S. (Hill, 2014). The developments outlined by Hill begs a lot of questions regarding import tariffs and the use of low costs to gain a competitive advantage in the industry.
Although tariffs imposition seems like a double-edged sword, some countries stand to benefit more than others. The imposition of tariffs on Chinese-made tires by President Obama’s administration came to the rescue of the U.S. domestic producers of tires. Consequently, the domestic labor market surged as a result of the shift of focus to local tire manufacturers. The country also stands to gain in revenues collected from the tariffs. The consumers, who are U.S. citizens, are left with no option but to buy locally manufactured products that are of higher quality than those imported from China with relatively higher costs. China's competitors, Thailand, Indonesia, and Mexico, are also an immediate beneficiaries of the tariff imposition. Low-income earners in the U.S. found alternative sources of low-cost tires despite the imposition. China, on the other hand, as observed from the excerpt, experienced a tremendous decline in the value of exports to the U.S., significantly lowering the revenue from exports (Hill, 2014).
An important aspect to deduce for the incidences surrounding the imposition of tariffs by the U.S. government on Chinese products is that it is an effective way to quell low-cost competitors while promoting domestic industries. Imports with lower prices ...