The People's Republic of China - Article Example

China has become the largest producer of consumer goods in the world. This country was able to gain entrance into the World Trade Organization in 2001. The U.S historically has prided itself in being a country in favor of free trade.

The U.S. government and President Obama promised the American people that they would protect the country against the threat the Chinese economy poses. I agree with the President’s decision to impose a tariff on Chinese tire imports. The reason that I believe this was the right decision is because the tire industry in the U.S. had reached a point in which it needed governmental intervention to salvage a dying industry. Between 2005 and 2009 the U.S tire industry lost 5,000 jobs. The tire industry is a byproduct of the automobile industry. The U.S. has always prided itself in the accomplishments of the Big 3 automakers. The policy to protect the U.S tire industry by imposing a tariff seems like a logical move because Chinese imports were cannibalizing the U.S. market. During the last five years, Chinese imports of tires had tripled in volume.

The new tariff on Chinese tire imports benefits the U.S tire manufacturers that have operations in the United States territory. It is important to help these companies because they provide the U.S. economy with thousands of jobs. The U.S cannot afford to keep losing American jobs to foreigners. The tariff penalizes Chinese companies and American companies that took the easy way out by outsourcing their tire operations to China. A stakeholder group that benefits from this policy is American workers. This new policy should help ignite job creation in the U.S. tire industry. Another stakeholder group that benefits from the policy is low-price tire manufacturers outside of China. The group that is hurt the most by this policy is Chinese tire manufacturers. Another stakeholder group that is potentially hurt by this policy is the consumers of tires because they will not able to purchase Chinese imported tires at rock bottom prices anymore.

The decision to impose a tariff on Chinese tires was a difficult one because the U.S. typically does not believe in the use of protectionism. Protectionism can be defined as the government’s placing of tariffs or quotas on imports to protect domestic industries from global competition. If the government were to impose tariffs on all goods imported into the United States then the U.S. would be in complete violation of the WTO and it would not be promoting free trade. Another negative consequence of imposing tariffs on all goods imported is that it would raise the prices of all consumer goods which would lead to inflation and a higher cost of living for the American people. If tariffs were imposed on all items coming into Broward County my life would be very different because I probably would have to get a second job just to pay for my living expenses. The prices of consumer goods would skyrocket in Broward County.

Governments often have to make tough decisions that may have political and economical backlash. President Obama made the right choice to impose a tariff on Chinese tire imports because China was cannibalizing the market by flooding it with millions of cheap tires. The excess amount of cheap tires in the marketplace was hurting this industry as American companies could not make a profit due to the malice intent of the Chinese tire industry. The U.S. tire industry made the right decision to seek protection from Chinese imports. The new tariff should stabilize the prices of tires to ensure that American companies do not have to continue to lower their prices in order to compete with cheap Chinese tires. In the long run, the move should help increase the production of U.S tires and the industry will be able to hire back a lot of the employees it laid off during the past five years.