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The · Psychohistorian


Protectionism at work

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A week ago, the Obama administration imposed a 35% duty on Chinese tires:

http://timesofindia.indiatimes.com/news/business/international-business/US-imposes-35-additional-duty-on-Chinese-tyres-/articleshow/5003191.cms

The American owner of a couple of the Chinese tire factories waited only a few days to pass along the cost to the consumer:

http://www.tirebusiness.com/subscriber/headlines2.phtml?cat=1&headline=Cooper+raising+prices+on+most+consumer+tire+lines&id=1253220210

Basically the duty ends up as a tax on discount tires that are bought primarily by the poor and marginally employed.

Who benefits? JK Tyre, with factories in India and Mexico, may benefit from low cost labor outside of China. Goodyear might benefit somewhat, but even with the duties, they'll find it difficult to compete in the discount market. Probably the biggest beneficiary is Bridgestone, the big Japanese tire manufacturer.

So basically, the working poor in America end up subsidizing the Japanese tire industry. Brilliant.
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On September 21st, 2009 08:13 am (UTC), kirisutogomen commented:
Amen, brother. Did you see this week's Economist leader? They really laid into Obama (also pointing out that pissing off China in the midst of negotiations with North Korea might not have been the shrewdest move).
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