China is one of the Main Countries that Export Their Goods to the United States - Essay Example

Putting tariffs on the goods from China to the United States has been one of the most controversial debates. There has been a section of the society that have insisted on the importance of, and urgency with which goods from China should be subjected to tariffs. However, another section has warned of possible repercussions should this policy be implemented. This paper seeks to defend the decision to put tariff on tires from China. China remains the main threat to the economy of the United States.

This is because it is taking up the markets that were previously a preserve for the United States. It has come up with cheap products in the world market because they have reduced cost of production due to cheap labor in their home country. This has seen them acquire various markets in the world, including the market in the United States. As Sandwick (56) says, although it is good to encourage competition within the economy in order to facilitate fair trade, some competitions are obviously unfair.

This scholar points out to the fact that in the process of facilitating fair trade, care should be taken to ensure that none of the players have an unfair advantage over others. The tires from China have been made using very cheap labor back in the parent country. When they are brought to the United States, they come with prices that reflect the cost of labor. There are other firms within the United States producing the same products locally with the cost of labor being much higher than that in China.

This local US firm will also bring their products to the American market taking into account the cost of production. When the two competitors meet in the same market, the Chinese firms will have an unfair advantage over other firms. Their prices will definitely be more attractive than those of the local firms. This will result in a situation where these foreign firms will cannibalize the local firms. They would take the largest share of the local market, and due to frustration, the local firms would be forced out of the market, or be absorbed by the foreign firm.

It can be very unfortunate when a foreign firm drives out the local firms from the market. The situation is worsened by the fact that these local firms cannot export to China because back in China, the prices would even be lower and these American firms would need to incur transport and other costs. Other markets around the world have also been taken by these Chinese firms with very cheap products. This would completely eliminate the local firms from the market, a fact that can lead to serious pressure on the economy.

Some individuals have argued that China is one of the main countries where the United States exports their products. These pundits argue that by imposing tariffs on the Chinese goods, the Chinese government may respond by imposing the same on the American products coming to their country, a fact that would reduce profits of the American exporters. Although this argument is very valid, a mathematical calculation would still point out that the US stands to lose if the tariffs are not imposed. This is because Chinese export to the US is fast outgrowing its imports from the US.

This is even worsened by the fact that the Chinese exports are so cheap, thereby posing serious threats to the US firms. It is a fact that by imposing a tax, the US exporters may feel the pinch. However, it would protect the local firms; hence protecting the local economy from a possible wipeout by the Chinese firms. Rollin argues that