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I believe in tires at midnight

2009-09-15

Over the weekend, the Obama administration issued a 35% tariff on Chinese-made tires. This power was a provision of a 1970s trade agreement that allowed the president to unilaterally apply a tariff against Chinese goods if the executive branch felt that China was trying to dump goods or disrupt the US market for a product.

Who pays this tariff? Since Chinese companies have to pay the tax to get their tires past US customs, you might think they are the targets. You would be wrong.

At a time when US citizens can least afford a new tax, rest assured that the money will come right out of our wallets. This restraint on trade will cause all tire suppliers — both domestic and foreign — to raise their prices. Why not? As long as their pricing stays competitive with Chinese-made products, they won’t suffer. Pirelli, Michelin, Metzler, Goodyear, Bridgestone, Continental — you can bet that every one of them will raise prices in response to this new market condition.

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