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US Tire Tariffs: Saving Few Jobs at High Cost

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Listed:
  • Gary Clyde Hufbauer

    () (Peterson Institute for International Economics)

  • Sean Lowry

    () (Peterson Institute for International Economics)

Abstract

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.

Suggested Citation

  • Gary Clyde Hufbauer & Sean Lowry, 2012. "US Tire Tariffs: Saving Few Jobs at High Cost," Policy Briefs PB12-9, Peterson Institute for International Economics.
  • Handle: RePEc:iie:pbrief:pb12-9
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    File URL: https://piie.com/publications/policy-briefs/us-tire-tariffs-saving-few-jobs-high-cost
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    References listed on IDEAS

    as
    1. Gary Clyde Hufbauer & Kimberly Ann Elliott, 1994. "Measuring the Costs of Protection in the United States," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 77.
    2. Gary Clyde Hufbauer & Jared C. Woollacott, 2010. "Trade Disputes Between China and the United States: Growing Pains so Far, Worse Ahead?," Working Paper Series WP10-17, Peterson Institute for International Economics.
    3. Gary Clyde Hufbauer & Ben Goodrich, 2001. "Steel: Big Problems, Better Solutions," Policy Briefs PB01-09, Peterson Institute for International Economics.
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    Cited by:

    1. Sébastien Jean & Ariell Reshef, 2017. "Why Trade, and What Would Be the Consequences of Protectionism?," CEPII Policy Brief 2017-18, CEPII research center.
    2. Charnovitz, Steve & Hoekman, Bernard, 2012. "US Special Safeguard on Imports of Tires from China: Imposing Pain for Little Gain," CEPR Discussion Papers 9217, C.E.P.R. Discussion Papers.
    3. Oecd, 2017. "Making trade work for all," OECD Trade Policy Papers 202, OECD Publishing.
    4. Baracat, Elias A. & Finger, J. Michael & Thorne, Raul Leon & Nogues, Julio J., 2013. "Sustaining trade reform : institutional lessons from Peru and Argentina," Policy Research Working Paper Series 6610, The World Bank.
    5. Paul H. Rubin, 2014. "Pathological Altruism and Pathological Regulation," Cato Journal, Cato Journal, Cato Institute, vol. 34(1), pages 171-183, Winter.
    6. Charnovitz, Steve & Hoekman, Bernard, 2013. "US–Tyres: Upholding a WTO Accession Contract – Imposing Pain for Little Gain," World Trade Review, Cambridge University Press, vol. 12(02), pages 273-296, April.

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