Obama’s Tariff On Chinese Tires Cost Americans $1.1 Billion In Higher Prices

CHINA-US-CONSUMER-RECALL-FILES

Gee, thanks President Obama:

In his 2012 State of the Union address, President Obama claimed that “over a thousand Americans are working today because we stopped a surge in Chinese tires.” The tire tariff case, decided by the president in September 2009, exemplifies his efforts to get China to “play by the rules” and serves as a plank in his larger platform of insourcing jobs to America. However, our analysis shows that, even on very generous assumptions about the effectiveness of the tariffs, the initiative saved a maximum of 1,200 jobs. Our analysis also shows that American buyers of car and truck tires pay a hefty price for this exercise of trade protection. According to our calculations, explained in this policy brief, the total cost to American consumers from higher prices resulting from safeguard tariffs on Chinese tires was around $1.1 billion in 2011. The cost per job saved (a maximum of 1,200 jobs by our calculations) was at least $900,000 in that year.

That’s $1.1 billion that Americans could have spent on improving their lives, but were instead forced to pay for tire prices inflated by Obama’s trade protectionism.

Trade protectionists always like to focus on jobs supposedly lost ignore one aspect of free trade that benefits all consumers: Lower prices thanks to an expanded marketplace. While companies are often vilified for moving manufacturing and other parts of their operations to different countries, they do it because that saves them money. And saving money allows them to keep prices down.

In fact, I’d say that free trade is one reason why inflation hasn’t had more of a devastating impact on our quality of life. According to the inflation calculator provided by the Bureau of Labor Statistics (which many will argue underestimates the impact of inflation) a $50,000/year salary in 2012 dollars would have been worth only $17,804.13 in 1980 dollars. Yet, despite that decline in the value of our currency, Americans aren’t living at a lower standard. If anything we’re living in a higher standard.

One explanation is the explosion in personal debt. Far too many Americans are living beyond their means. But another explanation is that stuff has gotten cheaper thanks to free trade and other market advancements. We can afford more stuff, because more of that stuff is made cheaply in places like China.

Thanks to our global economy, we can afford to live better lives even as the value of our money plummets.

Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters. He writes a weekly column for several North Dakota newspapers, and also serves as a policy fellow for the North Dakota Policy Council.

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  • bobby

    rob, flop shot here, and you lost your 11%, but a good topic. I am looking at an ad above my type box for ecopia new tires and fueltech retreads (algoads!}, which makes this fun. I know your point is dollars, but I know something about trade cases. basically, we’d get angry business owners complaining that obama was letting the chinese sell cheap tires and auto parts, if obama didn’t fix it, they’d have to fire people and leave. they did the same under bush, I hear, but money was easy then. anyway, in response to this, I had to pitch the value of a trade case to a very conservative manufacturing interest group. romney pretend hates china too. the whole basis is advanageous funding oversees, currency manipulation, negative tariff, etc. we use penal tariff’s and counterveiling duties to ensure free trade, based on relatively unmanipulated currencies. all that said, china done make some cheap tires. not 1.1 Bb cheap, when acconting for currency manipulation, but still cheaper than oh!

    • fedupny

      It was the unions that made the complaint, lead by the USW. US manufacturers really didn’t gain much by this tariff, other than to be able to raise prices on their products more than they would have been able to without it. Foreign manufacturers filled in the gap when Chinese imports fell because of the tariff.

      The report linked below “US Tire Tariffs: Saving Few Jobs at High Cost” explains the numbers and results of the tariff.
      http://www.iie.com/publications/pb/pb12-9.pdf

      • bubba/bobby

        US producers didnt gain by the tariff other than being able to raise the price. isn’t that the point? this is longstanding antidumping policy, that was my point. I think it’s correct to note the entry of other players, like sk’s hankook. China is sanctioned because they manipulate currency, and are highly involved as state actor. if rob thought about it, that would have been the intersting point. sadly, he’s on the al roker plan.

        • bobby/bubba/rob after college

          Meanwhile, sk is, ostensibly, a free trader. mitt hates china too, right?

  • Roy_Bean

    In his 2012 State of the Union address, President Obama claimed that “over a thousand Americans are working today because we stopped a surge in Chinese tires.”

    Did he also mention the thousands who lost their jobs because they stopped the surge of Brazilian sugar?

    • WOOF

      The sugar oligarchs have been embargoing world sugar since they fled Castro.

      • guest

        363,000 lost their jobs LAST WEEK, while only 171,000 jobs were created for the MONTH. Please explain that to all of us. And then explain to us why obama out sourced GM to China opening 11 plants.

      • robert108

        “The sugar oligarchs…”
        Still stuck in the 19th Century with your little tin god Karl Marx, comrade.
        Get current.

  • Harold

    The man chlld Obama has such a good understanding of business I don’t know how this piece could even consider complaining about how he handled this tire thing with China.hehehehe

    • Gern Blanston

      HE’LL DO EVEN BETTER IF WE RE-ELECT HIM AND HE APPOINTS A SECRETARY OF BUSINESSS.

  • sbark

    Say hey………are USA Tire Mfg employee’s mainly Unionized…..by chance?

    • fedupny

      United Steel Workers

  • WOOF

    When the Bishop with the apocalyptic visions
    promises to strike the Chinese heathens for manipulating
    their currency , Republicans cheer.
    When Obama does something about it,
    Republicans jeer.

    • Albert Dunderfinch

      “When Obama does something about it, Republicans jeer.”

      “tire prices inflated by Obama’s trade protectionism.”

      Once again you prove the validity of your nickmame, “DOPEY”

      • WOOF

        That would make you Snow White.

        • Albert Dunderfinch

          Ah, another aspect of your life revealed. You wanting a man to be an innocent young woman. However, it doesn’t change the fact that you’re a dope, which you so willingly and easily prove every day.

          • robert108

            Marxists are stupid. They don’t know how the world works, and are willing to destroy anyone who does.

    • guest

      obama did nothing to curb the games the Chinese play with their currency. What obama did cost Americans more $$$. Try to catch up.

  • robert108

    The purpose of trade tariffs is to shovel money to the unionists, whose greedy demands have made US goods uncompetitive. Let’s give everyone a “fair shot”.

    • matthew_bosch

      Agree. Union’s create an artificial market clearing price for worker compensation. Unless protectionism/stimulus is deployed, unionized businesses struggle to survive natural, free market conditions, because artificial costs aren’t able to adjust with realistic revenues.

  • Mildred Midlefinch

    Wonderful spin. Normally it would be “Obama ships jobs to China”, but when he keeps jobs in our country you come up with this crap. Heads I win, tales you lose. Just stick to the formula. Find any story, spin it so Heidi or Obama did something wrong, and then ask you right wing sponsors to send you a pay check for distorting the truth.

    • fedupny

      “The big winners from the 2009 safeguard tariffs were alternative foreign exporters, primarily located in Asia and Mexico, selling low-end tires to the United States. Domestic tire producers were secondary beneficiaries. The members of the labor union that petitioned the ITC’s investigation received only a small share of the money extracted from the pockets of American households. US car and light truck tire consumers are paying higher prices regardless of whether they purchase a Chinese or non-Chinese tire. Jobs created in the tire manufacturing industry were more than offset by the loss of jobs in the US retail sector. As an added consequence, US chicken firms lost export sales in the wake of Chinese retaliation.”

      “In retrospect, tire safeguards did not change Chinese policies in a helpful way, nor did they boost US employment. The best thing about the tire tariffs is that they expire in September.”

      “US Tire Tariffs: Saving Few Jobs at High Cost”

      http://www.iie.com/publications/pb/pb12-9.pdf

  • The Real Albert Dunderfinch

    It has become obvious some people are stealing and using my name, which is copyrighted. However, I don’t mind a bit, because they seem to be helping with the fight to drive the liars on this site into submission. Actually I appreciate the help. Often I want to go out hunting, or take an extended trip. Often I worry who will stem the tide of lies Rob puts out daily. It is nice to know someone will come in from the bench and shoot holes in the distortions. This is like having someone at work to fill in for you. The bad news is it looks like the fake is doing a better job than the real one. Keep up the good work. The more people who rebel against the lies on this site the more hope we have for democracy returning.

    • The Real Albert Dunderfinch

      Oh, and I love to cut the grass in my undersized, Jr. High wrestling singlet. If you see me outside, stop by and I’ll give you a sweaty hug; we can slam Rob while snacking on Slim Jims and Kool Aid – OHHH YEEEAAAAAHH!!!

  • Dustin Gawrylow

    Gearhead Commentary: I prefer Pirelli tires from Italy. American made tires have increased in cost about 3 times faster as foreign tires over the last 10 years, so Pirelli’s are now affordable. On the cheap end, Japanese tires like Kuhmo and Falken are decent for the price, though they wearout super fast. I wouldn’t want even to risk driving on Chinese tires.

  • Stephanie

    Unfortunately my family has been dealing with the fiscal impact of this decision. Those 1200 jobs saved cost jobs and income loss for the retail end. In our case, about a $1,000 dollars a month gone but hey we now are eligible for food stamps. We just loved going from an independent family to relying on a handout.

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