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eagle2
09-18-2009, 09:08 PM
And if China retaliates with countervailing tariffs, every union tire plant job 'saved' by the tariff will be offset by a union job lost at a US auto parts plant plus a non-union job lost at Tyson chicken plant plus additional job losses in whatever industries future Chinese countervailing tariffs may affect.

If China is buying Tyson chicken, the most likely reason would be is because they are unable to produce enough chicken in China for themselves, so I doubt China is going to block sales of Tyson chicken to China. The Chinese have to eat.

Given that a significant part of the Chinese economy is dependent on exports to the US, I doubt their government is going to start a trade war with us.

eagle2
09-18-2009, 09:13 PM
So what you're really talking about in regard to the new tariff is Chinese tire workers receiving exactly the same rate of pay ... or becoming unemployed. What you're talking about is American tire buyers being forced to shell out X extra dollars for the 'same' quality tires ( = X dollars that cannot be spent / saved / invested elsewhere). But arguably the most important issue you are talking about is the ability of the American gov't to pocket X dollars worth of additional tax revenue from the tariff that was involuntarily extracted from US tire buyers ( the majority of which will not even be aware of this 'stealth' taxation), as well as reducing the 'all in' production cost differential between Chinese tires and American tires from the pre-tariff 2:1 ratio to perhaps a 1.5:1 ratio ( but still nowhere near 1:1 ).


Tariffs on tires aren't any more involuntary than any other form of taxes. That is how our democratically elected government raises money. If people don't like it, they're free to vote against the government that implemented the tax, or they can always move to another country.

Melonie
09-19-2009, 04:34 AM
This is what the Chinese themselves had to say about the situation ...

(snip)""Chinese tire producers pose no direct competition to those in the US," he said before adding that China's tire exports to the US had not witnessed a remarkable increase as claimed by the USW.

Last year, the country's tire exports to the US grew by just 2.2 percent compared to 2007 and, in the first half of this year, fell 16 percent compared to 2008, explained Yao.

"Four US companies have tire production operations in China and account for two-thirds of exports to the US. The tariffs will have a direct impact on them," he said.

Cooper Tire and Rubber Co, a US-based tire maker, warned that higher tariff could disrupt markets.

The company said in a statement it believes in free and fair trade, and that the ITC's proposed remedy "is not appropriate or acceptable and could have significant negative impacts causing considerable market disruption".

The industry insider told China Daily the closure of many US tire factories "is, to some extent, a result of the strategic adjustment of the tire industry", with many tire firms moving production of low-end tires off-shore to make use of cheap labor.

"President Obama's decision is not in the interest of companies seeking higher profit margins," the insider said.

Analysts claim the actions of the Obama administration are at odds with its public statements about how protectionism could deepen the ongoing crisis."(snip)

from

Hopefully the direct effect of the Chinese tire tariff is painfully obvious. It selectively removes the cost advantage of the recently opened Chinese tire production facilities of the major US tire makers, thus reducing their incentive to close remaining US tire production facilities and expand Chinese facilities. This preserves USW jobs in American tire plants, and 'costs' jobs in Chinese tire plants, at the price of more expensive tires for EVERY US customer as well as lower returns for investors in the American tire companies.

Arguably, one major aspect of US gov't policy re the tire tariff is identical to US gov't policy exhibited during the GM / Chrysler bankruptcy ... subsidize and preserve the (economically uncompetitive) jobs of unionized US workers at the expense of the private investors and US taxpayers / consumers.


As to US chicken exports to China ...

(snip)"About half of the chicken parts sold to China are wings and feet, which are worth only a few cents a pound in the United States. As delicacies in China, they fetch 60 cents to 80 cents a pound, a price that no other foreign market comes close to matching, according to industry experts.

Mr. Aho said the big chicken feet result from the American preference for white chicken meat. A bird bred for big breasts is necessarily bred to have big, strong feet and legs, he said. The United States is by far the world’s leading supplier of king-size chicken feet."(snip)

(snip)"Mr. Sumner’s group and the National Chicken Council joined other American food organizations in sending a letter to Ron Kirk, the United State trade representative, cautioning that action against Chinese tires could lead to retaliation. “For some, the Chinese market is the difference between profitability and possible bankruptcy,” the letter warned. "(snip)

from

Again, the obvious point here is that the Chinese chose to target chicken because it is a huge source of extra profits for American poultry corporations - extra profits which will arguably make the difference between solvency and bankruptcy for some American poultry corporations. So this isn't about the Chinese being 'short' of chicken ... it's about some US poultry corporations going bankrupt, resulting in the loss of jobs plus an increase in the price of chicken sold in America by the remaining poultry corporations.



Tariffs on tires aren't any more involuntary than any other form of taxes. That is how our democratically elected government raises money. If people don't like it, they're free to vote against the government that implemented the tax, or they can always move to another country.

True on the surface, but in point of fact the majority of Americans will be unaware that the rising price for tires is due to a new (tariff) 'tax' ... just as they were unaware that the rising price for gasoline was due to a new (tariff) 'tax' on the mandatory ethanol additive. During the last election cycle the majority of Americans failed to 'connect the dots' in regard to gasoline and the foreign ethanol tariff, and there is no reason to believe that the 'dots will be connected' re the tire tariff when the next election cycle rolls around.

And yes the option of becoming an expatriate to minimize US taxes still exists, and the number of expatriates continues to increase in number. But in the absence of renounced citizenship, US expats still pay US taxes and still vote !

hockeybobby
09-19-2009, 07:16 AM
"President Obama's decision is not in the interest of companies seeking higher profit margins," the insider said.

President Obama will make decisions based on the interests of the citizens of the United States...and they may conflict with the interests of companies seeking higher profit margins. The migration of good jobs to places that exploit their workers and foul the environment is a troublesome trend. I see no reason to protect or encourage that trend. You seem to have no problem with it Mel. We can agree to disagree.

Melonie
09-19-2009, 08:00 AM
^^^ I agree to disagree ... with the accuracy of your assertion. While the imposition of tariffs on Chinese tires mainly produced by the Chinese plants of American tire companies is 'based on the interest of SOME citizens of the United States' - specifically those who belong to the United Steel Workers and who are employed at US plants of those American tire companies, I fail to see how this benefits any other Americans. Arguably, it HURTS some other Americans, specifically those who buy tires and those who own investments ( or their mutual fund / retirement fund owns investments ) in those American tire companies.

Of course, Canadians like yourself are still able to purchase Chinese tires at low prices ! This in turn allows you to offer an opinion which is free of personal financial consequences.

hockeybobby
09-19-2009, 08:18 AM
I favour Canadian or American made goods overwhelmingly over other goods. US or Canadian made represents quality to me, and also helping my community. I recognize the need to encourage and help developing countries to obtain my standard of living, but I depend on my government to ensure fair trade practices, and promote reasonable labour and environmental standards in those developing nations.

And yes, some citizens will be hurt in the narrow sense by the tariff, but the greater good is ultimately served. Politics is all about difficult choices.

Melonie
09-19-2009, 03:13 PM
And yes, some citizens will be hurt in the narrow sense by the tariff, but the greater good is ultimately served

I'm curious as to how your 'greater good' is calculated. From my viewpoint, the enacting of the tire tariff had one positive effect ... it 'preserved' 5,000 high paying USW jobs at some American tire plants. In terms of negative effects ...

- it will cost 20,000 job losses in China
- it will extract at the very least an extra $10 billion from future US tire buyers that cannot be spent in another area of the US economy
- it will reduce the profits of the US tire companies, and reduce dividends to their stockholders / investors
- it will reduce US gov't tax revenues received from those US tire companies and their stockholders / investors
- it will increase the cost of capital for all US corporations who are attempting to expand operations in Asia

hockeybobby
09-19-2009, 03:34 PM
I'm curious as to how your 'greater good' is calculated. From my viewpoint, the enacting of the tire tariff had one positive effect ... it 'preserved' 5,000 high paying USW jobs at some American tire plants. In terms of negative effects ...

- it will cost 20,000 job losses in China
- it will extract at the very least an extra $10 billion from future US tire buyers that cannot be spent in another area of the US economy
- it will reduce the profits of the US tire companies, and reduce dividends to their stockholders / investors
- it will reduce US gov't tax revenues received from those US tire companies and their stockholders / investors
- it will increase the cost of capital for all US corporations who are attempting to expand operations in Asia

Again, politics is about choices...American jobs or Chinese jobs. Do you realize how many people depend on those 5000 jobs? I've talked about it before, for every worker in a well paid job, there are a myriad of others who supply, transport, sell, administrate, provide services for, and otherwise depend on those people and the plants they work in.

For every dollar of profit reduced, there will be a corresponding dollar of profit made. Same with the tax revenue. And it will reduce the need to raise capital for US corporations, because they won't need to. If they can't simply exploit cheap labour and lax environmental laws oversees, they won't bother setting up plants there.

You just don't like Unions.

Melonie
09-19-2009, 03:50 PM
If they can't simply exploit cheap labour and lax environmental laws oversees, they won't bother setting up plants there.

You're missing the point that somebody else will ... or that the American tire companies will merely shift to making tires in India or Costa Rica or Vietnam to exploit THEIR cheap labor instead, but still circumvent the Chinese tire tariff. In a real world scenario there is no way to win at this tariff game.

You're also missing the point that this is costing every American tire buyer an extra $300 ... meaning that the $300 won't be spent at a local restaurant or a local store ... meaning that the net effect of higher trickle-down spending by the 5,000 USW tire plant workers versus lower trickle-down spending by the 5 MILLION US tire buyers will be neutral at best.

So which of us is stating economic facts, and which is being idological ?

hockeybobby
09-19-2009, 04:27 PM
You're missing the point that somebody else will ... or that the American tire companies will merely shift to making tires in India or Costa Rica or Vietnam to exploit THEIR cheap labor instead, but still circumvent the Chinese tire tariff. In a real world scenario there is no way to win at this tariff game.

You sure aint gonna win if you roll over and do nothing while good jobs disappear, replaced by cheap goods and slave labour wage jobs elsewhere.


You're also missing the point that this is costing every American tire buyer an extra $300 ... meaning that the $300 won't be spent at a local restaurant or a local store ... meaning that the net effect of higher trickle-down spending by the 5,000 USW tire plant workers versus lower trickle-down spending by the 5 MILLION US tire buyers will be neutral at best.

So which of us is stating economic facts, and which is being idological ?

it's not costing EVERY American tire buyer an extra $300 bucks Mel. Come on.

Zofia
09-20-2009, 06:26 AM
it's not costing EVERY American tire buyer an extra $300 bucks Mel. Come on.I have often wondered where this number comes from. The tires on my Honda cost about $50.00 each plus mounting and balancing. Figure four tires that's $200. According to Mel's figures I am going to see my tire cost more than double? That's just not likely. I read the annual reports of a couple of tire companies. Without Chinese production they are profitable. So I cannot see how she thinks the lack of Chinese competition will cause tire prices to more than double. That's just another of the perma-bear's illogical arguments.

Melonie
09-20-2009, 11:37 AM
^^^ well here's the logical argument. Tariffs on chinese tires, like an increased minimum wage, raises the price of the lowest cost option available. Leaving out the 'junk', the pre-tariff price of a halfway decent Chinese tire like the Fuzion HRI is somewhere around $300 for a set of 4 tires. The imposition of the tariff is going to increase that price to the ballpark of $450 ... admittedly a $150 increase not $300.

But in the same manner that raising the minimum wage also causes an increase in higher skilled worker wages, raising the minimum cost of a halfway decent Chinese tire will also result in a similar increase in 'higher quality' US made tires. For example the Firestone Firehawk which has a pre-tariff price of somewhere around $500 for a set of 4 tires is NOT going to remain at that price. If the Firestones sold at a price that was 50% higher than the Chinese tires before the tariff, they are likely to sell for the same 50% higher price AFTER the tariff i.e. $750 ... admittedly a $250 increase not $300.

But then the same thing is likely to happen with 'upscale' tires. For example, Michelin MXV's sold at a pre-tariff price of around $ 700 for a set of 4 tires is also not going to remain at that price level. Applying the same differential to post-tariff prices will likely increase the Michelins' price to $1050 ... which IS a $350 increase.

Now consider that the above prices are for common sized passenger car tires ... and that prices for more expensive SUV / truck / performance tires will increase by even wider dollar margins. If you take an overall average the $300 isn't a totally wacky number. Unless of course the scheme backfires, with the rising prices of ALL tires forcing more and more Americans to buy the Chinese imports despite the tariff, and causing even fewer US made tires to be sold ! If that happens then US tire buyers will indeed be paying less than $300 because of the tire tariff and a 'downscale shift' in buying pattern a la former JC Penney shoppers doing a 'downscale shift' to WalMart.

hockeybobby
09-20-2009, 11:42 AM
There is nothing in this that forces American tire producers to jack up the price of their tires. All that would do would be to restore the price imbalance and thwart the effect of the tariff. That wouldn't be smart, and American consumers and legislators would call them on it. This is a weak and unrealistic argument Mel.

Melonie
09-20-2009, 11:47 AM
This is a weak and unrealistic argument Mel

time will tell ! But the arguable fact is that the present profit margin resulting from domestic tire production by US tire companies is flirting with zero ... which is the reason that the US tire companies have erected Chinese tire plants and have closed US tire plants. If import of their Chinese made tires is stripped of its high profit margin via the imposition of the tariff, then either the US tire company investors will be forced to take a bath or the lost profits will have to be made up for by increasing the prices of domestically produced tires. Personally, I'm bettting on the price increases.



There is nothing in this that forces American tire producers to jack up the price of their tires

... and there was nothing in the minimum wage increase law which forced employers to increase the pay for workers earning $8 or $9 or $10 per hour. But market realities forced that this happen nonetheless.

threlayer
09-20-2009, 01:18 PM
OK. Turn the tables. If practically all the large military contractors were about to go belly up, such as General Dynamics, Lockheed-Martin, GE, etc because of similar reasons (such as thje military buying most of their products overseas), then how would you feel about such a big government subsidy?

Yes, you can argue endlessly about the practicality of such an event or talk about peripheral topics, but this is a pretend event, a test what-if case. Just to get your feeling about subsidizing another big important sector.

Oh, those companies have unions too.

threlayer
09-20-2009, 01:22 PM
I think you really ought to investigate the working conditions and pay scale of Chinese workers before you espouse the importation of Chinese goods because the US wants to have a middle class, unlike China.

Melonie
09-21-2009, 03:38 AM
investigate the working conditions and pay scale of Chinese workers before you expouse the importation of Chinese goods because the US wants to have a middle class, unlike China

Well, you have just raised the FUNDAMENTAL issue of this entire subject. Chinese tire workers are semi-productive, have a labor cost of around $2 an hour, and a benefit cost of around zero. In contrast USW tire workers in America have a labor cost of well over $20 per hour, and a benefit cost of nearly $20 an hour as well. Are American tire workers more productive than Chinese tire workers ... yes. Are American tire workers FOURTY TIMES as productive as Chinese tire workers ... NO. So if America wants to maintain USW tire jobs that cannot 'pay for themselves' in terms of real world costs versus productivity, they have to be subsidized. In the case of the tire tariff, USW tire jobs wind up being subsidized by a 'stealth' tax being imposed directly on imported Chinese tires, and a likely price increase on tires from all other sources.

But this leads to a situation where 'poor' US consumers must subsidize 'middle class' USW tire workers ... a situation which is untenable if those 'poor' US consumers were made aware of it's existance ! Also, 'middle class' Americans from all walks of life must also subsidize 'middle class' USW tire workers for the same reasons ... a situation where 5,000 USW tire workers benefit while 5 million 'middle class' American tire buyers arguably suffer to a small degree, as do small businesses and their workers who also suffer by the reduced spending of those 5 million 'middle class' American tire buyers. It's all too easy for mainstream media to look at one side of such issues (i.e. the 5000 USW jobs being 'saved') while ignoring the consequences on the other side.

And as I pointed out in an earlier post, the likely price increases in ALL tires as a result of the Chinese tire tariff does have the potential to prompt the same of even MORE Chinese tires in the future ... since they will be higher in price but still the lowest cost option on the table for Americans that need new tires. As such, it IS possible that the Chinese tire tariff may actually increase the number of Chinese tires exported to America, and reduce the number of domestically produced tires that are sold, as rising tire prices across the board prompts cash-strapped American consumers make a 'downscale' shift to save every dollar they can.

threlayer
09-21-2009, 11:30 AM
You are saying the same thing all over again, only different.

Again, an investigation of the working conditions and pay of Chinese workers would produce pretty appalling results. There is no American workers who wuld undergo the same conditions. We accept these conditions of those workers and Chinese government because (choose none, some, or all):

it is none of our business how badly they are treated, as long as we get cheap goods out of the situation;
we don't really give a flying fig how badly they are treated because business is business and dollars is dollars;
we probably couldn't do anything about those appalling conditions, even if we tried;
if we did try, we would likely be the subject of economic retribution which would be damaging;
we are scared of the Chinese and will do anything they demand of us, even accepting their contribution to various atrocities and genocides or whatever they choose to do for their own good.


You see, we are playing a potentially deadly game with a serious adversary in which we both pretend that they are doing the US lots of (apparent) financial favors, while actually they are maneuvering the US into a position in which they hold most all the advantages. It is amazing just how many US government officials just do not realize that inscrutible strategy, while many of the rest of us complain about shifting jobs, industry, wealth, and at the same time purchase more and more low cost Chinese goods. and SIMULTANEOUSLY complain about the damage it is doing to the US. What money whores we are!!!


...the likely price increases in ALL tires as a result of the Chinese tire tariff does have the potential to prompt the same of even MORE Chinese tires in the future ... since they will be higher in price but still the lowest cost option on the table for Americans that need new tires. As such, it IS possible that the Chinese tire tariff may actually increase the number of Chinese tires exported to America, and reduce the number of domestically produced tires that are sold....

I believe that may be just speculation on your part. If US tire manufacturers are dumb enough to pull this stunt, they need their business reduced. US tire manuacturers complained, the government responded. If they violate that implicit "contract" as some big businesses do all the time, they deserve punishment and no further government consideration. I'm sure they know that.

threlayer
09-23-2009, 10:43 PM
Sounds like you all are expecting the absolute worst from this new president, when actually you have already gotten it from the last one.

eagle2
10-01-2009, 07:49 AM
Well, you have just raised the FUNDAMENTAL issue of this entire subject. Chinese tire workers are semi-productive, have a labor cost of around $2 an hour, and a benefit cost of around zero. In contrast USW tire workers in America have a labor cost of well over $20 per hour, and a benefit cost of nearly $20 an hour as well.

Where do you get $20 an hour in benefits? That's $40,000 a year.

Eric Stoner
10-01-2009, 09:09 AM
Where do you get $20 an hour in benefits? That's $40,000 a year.

That's the hourly cost per worker of things like health insurance and pensions.

Melonie
10-01-2009, 02:50 PM
yes, health insurance contributions, retirement plan contributions, unemployment insurance premiums, workmen's comp premiums, 'employer's' share of Social Security and Medicare taxes etc.

Eric Stoner
12-08-2009, 09:28 AM
We told you so ! According to AP tire prices have shot up in the U.S. thanks mostly to increased tariffs on Chinese tires. Which btw, meet or exceed all U.S. safety standards. The biggest price increases came from Goodyear which imports fewer Chinese tires than its American competitors; only 2 %. Many Americans put off buying tires last year and are now stuck paying as much as 27% more.

All to "save" 5,000 U.S.W. jobs.

Melonie
12-09-2009, 02:05 PM
yup, lots of news releases now hitting the wire ...

Yokohama tires +6%
Toyo tires + 5%
Kuhmo tires + 10%
Nexen tires +8%

and where the 'American' manufacturers are concerned

Goodyear tires +6%
Cooper tires +5 to 10% pending


(snip)"Import tariffs, higher oil costs and lower supplies are inflating Pittsburgh-area tire prices as winter approaches.

Goodyear, the biggest U.S. tiremaker, just raised prices. Other manufacturers will likely follow suit to offset federal tariffs on Chinese-made tires and the rising cost of raw materials such as rubber and oil.

Flynn's Tire & Auto Service is starting to raise prices to meet its costs for new stock for its 17 Western Pennsylvania and eastern Ohio centers, President Joe Flynn III said. Wholesale prices have risen by 5 percent to 7 percent in the past few weeks, he said.

"Some price increases don't stick," Flynn said. "But because this one is tied to the tariff, I think this one will."

President Obama recently slapped a 35 percent tariff on tires after a union claimed an influx of Chinese imports has cost more than 5,000 tire workers their jobs since 2004. Those replacement tires account for about 17 percent of the U.S. market, up from 5 percent five years ago.

Lumped together under the tariff are tires made in China by major producers -- including Michelin and Perelli -- and tires made by Chinese manufacturers and sold in the United States under brand names such as Ling Long and Wanli.

But Chinese-made tires aren't the only ones getting more expensive.

Goodyear Tire & Rubber Co. will raise the price on all consumer replacement tires sold in North America by 6 percent starting Tuesday. The Akron, Ohio-based manufacturer cited raw material costs.

Goodyear imports about 2 percent of its tires from China, so the increase could offset tariffs. A 6 percent increase would bring the cost of a set of 16-inch Goodyear Ultra Grip snow tires to $432.48, according to online retailer Tire Rack.

"It's surprising how much tires cost," John Hoover of McCandless said Sunday as he waited for Sears Auto Center at Ross Park Mall to put new Goodyear models on his Ford Explorer.

"It's almost $200 a tire, and that's just for an average tire."

KeyBanc analyst Saul Ludwig predicts tire prices will go up 5 percent to 10 percent by January, the start of a year when Americans are expected to buy about 210 million replacement tires, according to the Rubber Manufacturers Association.

Cooper Tire and Rubber Co., based in Findlay, Ohio, raised prices across its lineup to recoup the cost of Chinese tariffs.

Ludwig expects Cooper to raise prices by 5 percent to 10 percent in the first quarter because of raw materials costs. A set of Cooper's 16-inch Lifeliner GLS tires, the company's moderately priced line, is around $350."(snip)

from


The clear result of the tariff seems to be that the exclusively Chinese tire brands are 'eating' the majority of the tariff cost out of their own profit margins i.e. incurring a 35% tariff charge while posting a 10% price increase. However, the tire companies that have both domestic, Chinese and other offshore tire production facilities are simply enacting a sizable 6% or whatever price increase across the board in order to defray the cost of a 35% tariff affecting a tiny percentage of their total tire supply (while pocketing an extra 4% or whatever net increase in profit margin resulting from the 6% or whatever price increase on the vast majority of their tires not subject to the tariff). And the other offshore tire brands that do not have Chinese production facilities are enacting similar 6% or whatever price increases across the board even though their net costs haven't been affected at all by the new tariff (thus pocketing the entire 6% price increase as an increase in profit margin).

And because of these across the board price increases, Chinese tires may actually gain market share as a result of the tariffs because they still represent the lowest cost option for hard-pressed car owners who are now being forced to replace 'illegally' worn down tires. If this turns out to be the case, then the tariffs will have actually accomplished nothing other than extracting more money out of the pockets of cash-strapped Americans by increasing the price of the least expensive new tire option available to them i.e. Chinese tires.


(snip)But the group expects replacement tire sales to jump about 3 percent next year as the economy improves and more drivers look to replace tires on old cars rather than buying new cars. The average tire can last about 40,000 miles, says Jennifer Stockburger, a tire test engineer for Consumer Reports.

"We see it right now that people are coming in with tires that should not be on the road," said John Spino, owner of Spino's Tire Services in Greensburg. "They're running it until they can't ride on it anymore."

He's noticed that drivers are leaning toward buying less-expensive tires rather than the premium line because of the economy.

Youngstown Tire Services owner Bill Fowler said the price increases will continue a trend in consumer habits he's noticed through the downturn in the economy.

"I've noticed I get a lot more calls for used tires," Fowler said. "I wish I had a trailer load. I'd be the busiest guy in town."(snip)

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