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New Tire Tax Import Tariff Strains Relationship Between U.S. and China

LUXies, trade relations between the U.S. and China have recently faced new challenges with Obama’s decision, last Friday, to impose an import tax on all car and light trust tires entering the U.S. by way of China.

This decision was highly influenced by labor groups that claim the large tire imports have affected job availability here in the U.S. Though, a decision such as this is most definitely going to affect the already strained relationship between U.S. and China.

Canada might be the largest trading partner with the U.S, but China is not far behind! Meaning, much of what we have access to in the U.S. on a consumer level most likely comes from Canada or China, so anything that affects the cost of this operation will surely affect the prices we see on a local level.

“You have to ask whether [the U.S.] is provoking China to be more aggressive in their pursuit of remedies themselves,” said Stephen Lamar, executive vice president of the American Apparel & Footwear Association. “This is a mature relationship and mature relationships can handle complex things, but they can also spin out of control.”—WWD.com

With this new imposed tax, the Chinese Government has chosen to file a complaint against the U.S. with the World Trade Organization. Not to mention, China has also instigated investigations in both chicken and auto parts exports for ‘antidumping and anti-subsidy’ claims towards the U.S.

Though, do note that it was recommended by the federal trade panel to raise it 55% the first year, 45% the second year and 35 % the third year and Obama has decided on much less of a raise. Settling on a 35% the first year, 30% the second year and 25% the third year.

“When China came in to the (World Trade Organization), the U.S. negotiated the ability to impose remedies in situations just like this one,” U.S. Trade Representative Ron Kirk said. “This administration is doing what is necessary to enforce trade agreements on behalf of American workers and manufacturers. Enforcing trade laws is key to maintaining an open and free trading system.” –via Huffingtonpost.com

Many experts are concerned with this decision by Obama, since it will take a collaborative effort with China to confront large global concerns we’re all facing. These concerns are climate change, the global economy and nuclear discussions with Iran and North Korea. Let’s not forget that ‘China is the world’s third-largest economy and a veto-holding member of the United Nations Security Council.’ The already strained relationship and culture differences create a barrier to complete cooperation and any additional stress at this time seems to lack a view of the larger picture for the betterment of all.

It will be interesting to see how things progress considering both leaders, President Obama and Chinese President Hu Jintao, will meet face to face at the G-20 summit in Pittsburgh today and tomorrow.

So LUX Nation, what do you think of this import tax and the affects it will have on the U.S. relationship with China? Do you support Obama’s decision or do you believe there could’ve been a more viable solution to the proposed problem?

Tagged in: china, obama, u.s., world trade organizations, tires, import tax tariff, trade laws,

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