China- US trade war

The President Barack Obama approved raising the tariff  tax on imported tires from China, in order to slow the growth of United States imports of Chinese-made tires. In the past, it  was a small tariff of 4%. However, the American president  imposed an additional tariff of 35 % for the first year, 30 % for the second year and 25 % for the third year.

Unions blame the growth of Chinese tires imports for the loss of thousands of American jobs. More than 5,000 tire workers have lost jobs since 2004, Chinese tires overwhelmed the US market and hurt profits for American companies.

China accused the US of protectionism which is forbidden by the World Trade Organization. China announced it would investigate complaints that American of chicken products mainly chicken feet benefit from government subsidies or are being dumped in China, which means being sold in China at below market prices.

As a result of that the tariffs are expected to raise pricing of all kinds of tires because there will be fewer cheap competitors.

American Companies will be under less pressure to lower prices since their not a rude competition. These companies have also been cutting production and as a result of that there will be fewer tires for sale. 

China is not stealing US jobs or engaging in unfair trade practices to undercut US economic might and exports its way to global power. In fact, most of Chinese exports to the United States are produced by firms owned by foreign companies, many of them American. These firms have moved overseas in response to competitive pressures to lower production costs and thereby offer better prices to consumers and higher returns to shareholders.

Trade barriers

Unintentional trade barriers can be created in different ways. Some national regulations, hight standards and procedures can lead to intentional trade barriers to the countries that are interested in exporting their products overseas.

Recently, piracy has become a significant barriers for trade in Indian Ocean, which provides major sea routes connecting the Middle East, Africa, and East Asia with Europe and the Americas. It carries a particularly heavy traffic of petroleum and petroleum products from the oil fields of the Persian Gulf. An estimated 40% of the world's offshore oil production comes from the Indian Ocean. 16,000 ships pass through the Gulf of Aden every year on their way to the Suez Canal in Egypt, transporting Asian goods. Due to the relatively high traffic of petroleum tankers and goods, piracy off the Somali coast has been rising. This has been a threat to international shipping since the second phase of the Somali Civil War in 2006.

Piracy in Somalia has substantial international trade implications. Ships traveling through the Gulf of Aden have to bear the high cost of insurance, which has increased dramatically in the past few years. Companies that are not able to pay the insurance, have to take longer routes that take several weeks to reach Europe and North America and cost more in fuel.

The United States war on terror has become a real barrier to trade for US.  It caused delays on imported shipments. This security measure adds an average of two hours to each ship's arrival. The same process occurred to cargo planes and trucks entering the country. This kind of security has become a trade barrier that the United States created unwillingly. The associated costs that come with these security process have become the norm, and many other nations are actually adapting some of these systems in their own nation.

Globalization Drives Changes for US Automakers

Over the past few years, the American car companies lost millions of dollars. General Motors, Ford and Chrysler can not control the increase of the health care costs which affect negatively their competitive advantages, because they increase the price of the American cars and thus, decrease the comparative advantages.

I believe that the car companies should continue to pay the pension and health care costs for workers and retirees for many reasons. First, they have to follow the law of the health-care in United States. Second, because the Big Three had benefited from the bailout provided by the administration of the president George Bush and the president Barack Obama. The main reason of that bailout was to help the American workers to keep their jobs and their benefits package. 

It will be difficult for the Big Three to compete with other countries who offer national health-care. Most of these countries do not have the same wages and health care cost. For example, the hourly wages of workers at Toyota averaged is $24 while it is $30 for workers at the Big Three. American car companies can never compete with Japanese cars because there is a huge difference in the price and also because the Japanese cars are widely viewed as the most reliable and efficient cars in the world.

I think that the American auto industry should move to other producing countries with cheaper labor costs and lower operations costs. It’s important to eliminating domestic auto production because cars can be safely outsourced since they aren’t vital to the American national defense.   

It is true that many workers will lose their jobs if the Big Three outsourced their production. However, that will push other American industries to invest in new products and new technologies with an interesting comparative advantages.