Trade War - Chicken Feet and Tires

The two articles,"U.S. Adds Tariffs on Chinese Tires" and "Chicken Feet: A Symbol Of U.S.- China Tension," which indicates the trade war between the two nations. In this article, President Obama announced a 35% tariff on automobile and light-truck tires imported from China in September, 2009 to preserve jobs in the Unites States. China had major market share in the U.S. tire industry, a $1.7 billion dollar market. American imports of Chines tires tripled by 215% between 2004 and 2008, and China's share of the American market grew to 16.7% from 4.7%. Four American tires factories closed and about 4,500 tire production jobs were lost. Therefore, as a protectionist measure, the U.S. government imposed a 35% tariff rate on Chinese tire imports.




Chinese government announced imposing tariffs ranging from 43% to 105% on imports of chicken parts from the U.S. The United states is the major exporter of chicken feet to China. In 2008 the U.S. exported $677 million worth of chicken to China. It is very important for a government to be very careful while taking consideration in imposing those tariffs on specific product. Imposing a tariff while importing a product may have a vice versa effect while exporting them.

 

This trade war between both the U.S. and China will directly impact the consumers and the business in both countries. Tariff rates will create inefficiency in the economy for both countries. U.S. and China are great trading partners. In my opinion, both countries should have to renegotiate the trade policy and find the better solution to solve the problem. Avoiding the trade war is the best way to keep good relation between two countries and no one will suffer or lose from the trade war.

Are all trade barriers on intentional?

In our trade global economy almost anything can be to the cause for trade barriers. The most common barriers to trades are tariffs, quotas, and non-tariffs barriers.Trade barriers are government restrictions on international trade and it can be created unintentionally. Unintentional trade barriers could be terrorism, piracy, natural disasters, law and regulations and political issues.

On September 11th 2001, the twin towers of the New York's World Trade Center collapsed during a terrorist attack. It created new kind of trade barrier which is U.S. border security that makes it hard to trade between U.S. and the other countries.

 This attack on the U.S. had a very negative impact on the country's economy, imported goods and a lot of which we are still dealing today. After 9/11, industries like tourism and travel and immigration were areas that have been negatively affected by this. The increase in security at the ports, delay in the delivery of goods and parts to U.S. manufactures created an unintentional trade barrier.

Another unintentional barrier was created by the nature, like Japanese Earthquake and Tsunami of 2011. During that time, economy of Japan, world trade and financial market had negative impact from the Japanese Earthquake.

 The U.S. Food and Drug Administration had banned import of vegetable, fruit and milk products. The European Union, Australia, Hong Kong, Philippines, Singapore, India and Canada had required increased surveillance of food products from Japan. Big factories like Honda, Nissan and Toyota were shut down and were unable to supply the product to the world wide. US $235-310 billion worth of damage to the world's  third-largest economy.


 Unintentional trade barriers affect  a nation's openness to trade. They decrease productivity, complicate trade and slow down the movement of good and service between countries . So, no country wants to face unintentional trade barriers.

"Detroit's Big Three Face Obstacles in Restructuring"

During 1900s American automakers had a large market share, due to increase competition from foreign automakers it started sliding down. The Detroit's big three: General Motors, Ford and Chrysler are all suffering because of foreign competitive pressure. There are Various factors like health care, pension and different benefit programs that American auto makers provide to their employees in regards to their foreign competitors.


The Detroit's big three are burdened with the obligations to provide health care benefits for employees.In addition, foreign auto companies are not burdened with the same cost, because nearly all competitive countries have national health care systems. Foreign competitors are more focused in better products developments. The American companies are more focus on giving benefit on employee than focusing on making competitive products.

I think U.S. auto companies need to figure out how to reduce the health care cost and should more focus on making better product than foreign competitors to attract more potential consumers. It might improve the comparative advantage and bring a huge benefit for auto companies in the United states in the future. If it is hard for the U.S. automakers then they should import automobiles from Asia instead of manufacturing here. In Asia, labor is cheap and they have national health care system. I  think  U.S. auto should think about comparative advantage or outsource the companies where they can focus into their product and compete with foreign competitors.

Week 1 Blog:

How important for a country to be open to trade?


       It is important for a country to be open to trade because they will get more benefit from many dynamic gains.Openness provides stability  and attract more investors to do business in a foreign country. Through openness a country could build a good relation with the foreign country globally. A country can export excessive product that they have and import product that are limited to their production and benefits itself in numerous ways.

The more open countries get more opportunities. A country could find the cheaper materials to produce its products, invest countries reward the most, develop the new markets, and collect fund easily from different countries and increase competitive advantages for countries.

Introduction:

Hello Everyone!

      I'm santoshi Basnet and taking Global Economics Environments class for this fall trimester. I have created this blog to take part on discussion of  Global Economic Environments .  I’m going to post my thoughts and opinions on the topic what we are going to discuss every week in the class. I would like to share my blog with all of my friends.
 I’m looking forward to hearing all of your feedback and response.

Good Luck Everyone!