by Gary Clyde Hufbauer, Peterson Institute for International Economics
and Sean Lowry, Peterson Institute for International Economics
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In his 2012 State of the Union address, President Obama claimed that "over a thousand Americans are working today because we stopped a surge in Chinese tires." The tire tariff case, decided by the president in September 2009, exemplifies his efforts to get China to "play by the rules" and serves as a plank in his larger platform of insourcing jobs to America. However, our analysis shows that, even on very generous assumptions about the effectiveness of the tariffs, the initiative saved a maximum of 1,200 jobs. Our analysis also shows that American buyers of car and truck tires pay a hefty price for this exercise of trade protection. According to our calculations, explained in this policy brief, the total cost to American consumers from higher prices resulting from safeguard tariffs on Chinese tires was around $1.1 billion in 2011. The cost per job saved (a maximum of 1,200 jobs by our calculations) was at least $900,000 in that year. Only a very small fraction of this bloated figure reached the pockets of tire workers. Instead, most of the money landed in the coffers of tire companies, mainly abroad but also at home.
Paper: Three US-China Trade Disputes May 2, 2007
Book: US-China Trade Disputes: Rising Tide, Rising Stakes August 2006
Book: Case Studies in US Trade Negotiation: Two Volume Set September 2006
Policy Brief 03-1: Steel Policy: The Good, the Bad, and the Ugly January 2003