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| January 13, 2016

 

Obama Administration levies punitive tariffs on inporting tires and solar panel from China in the name of saving American jobs. Does tariff save jobs? Please specify your points of view.
 
Student 1

Marc Gunther stated that the tariffs were imposed by Obama administration on Chinese solar panels and tires had both positive and negative effects, negative impact being more. His article mentioned that Times reported a survey conducted by Peterson Institute for International Economics where they concluded that the tariff protected 1,200 American jobs. However, they added that American consumers paid $1.1 billion in higher priced tires where the tariff was 35% in import duties. The author argued that China retaliated the tariff by imposing tariffs on importing of American Chicken into China. In 2012, however, Obama’s administration let the tire tariff expire (2012). In my opinion, there is no point in adding tariffs to the imports of cheaper goods from other countries because at the end, American consumers are paying a higher price on these products. Due to this, Americans are spending more and this could have been spent on something else, like buying some other American products, which in turn would have created American jobs. China has a competitive advantage in tire manufacturing which was 235.2 million in 2008. US tire imports increased from 14.6 million in 2004 to 46 million in 2008 (Weisman, 2009). For solar panels, if they are made available to American consumers at a cheaper price, then there will be more demand, hence increasing the jobs for panel installers in the US.

 

I feel that though tariffs saved some jobs, still some opportunities are lost as the consumers unnecessarily spend on higher priced tires. Other jobs associated to installation of tires or solar panels are created when the prices are lower. US needs to focus on industries which are at competitive advantage compared to China, India etc. and increase industries that create jobs in US.

 

 

 

References:

 

Gunther, M. (2012). Why globalization is (mostly) green. Retrieved from: http://www.marcgunther.com/why-globalization-is-mostly-green/

 

Weisman, J. (2009). U.S. to Impose Tariff on Chinese Tires. The Wall Street Journal. Retrieved from: http://www.wsj.com/articles/SB125283952859406521

 Student 2
 

Punitive tariffs save jobs – in a short term basis – in the specific producer industry, such as tires and solar panels, because the foreign products will loss competition by paying an extra tariff. However, in a long term basis, tariffs will not save jobs. An economist experts notes that “generally the benefit caused by the increased domestic production in the tariff protected industry plus the increased government revenues does not offset the losses the increased prices cause consumers and the costs of imposing and collecting the tariff” (Moffat).

At the same time, trade that translates to privatization of public industries is not always beneficial for the country. Argentina, with Carlos Menem as president in the early 90s, is a good example in how privatization, global trade and dollar-peso parity, lead this country to an economic chaos. Thus, a case by case study basis will best define the correct answer to this question.

Reference:

Moffatt, M. (n.d.). What Are Tariffs and How Do They Effect the Economy? Retrieved November 8, 2015, from http://economics.about.com/cs/taxpolicy/a/tariffs_2.htm

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