Tuesday, September 15, 2009

Hysteria About Tire Tariffs on China

Tire tariffs directed against China are not going to significantly raise prices in the low end market. It just means the production will go elsewhere, to a competitor of China. Vietnam or Mexico are two prime locations. There is virtually no chance production will return to the U.S. - wages are just 'too high', even in Alabama.

This was Obama's shot-across-the-bow to China, with whom the U.S. is negotiating on a wide range of issues. A big one right now is the attempt to cobble together a G2 solution on greenhouse gas emissions. It was a geopolitical move, not a protectionist one in the fullest sense.

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