11/14/2004

Chinese Import Tariffs

Retailers, manufacturers, and importers are now bracing themselves for the possible repercussions when the import tariffs on Chinese furniture go into effect next week. The preparations began last spring as US retailers and wholesalers began decreasing their purchases from Chinese furniture makers, according to a recent article on msn.com

About one year ago a group of US furniture makers petitioned the ITC and US Commerce Department to impose the tariff. After further investigation, the Commerce Department found that 35,000 US jobs in the industry had been lost over the past 4 years due to the increase in the amount of American consumers that are purchasing the cheaper Chinese furniture.

Industry analyst, Ivan Cutler, predicts that if the average tariff exceeds 20% it will force some companies out of business, and if that happens some of the larger Chinese furniture makers with low tariffs will become more dominant and simply buy out the smaller manufacturers with higher tariffs. Donald Parker, senior vice president of merchandising for retail giant Rhodes Inc. said, "It's been the most divisive issue in this industry that I've seen in my 38 years in this industry."

Through the experiments that we did in class on Aplia, I have a hard time seeing how import tariffs can be beneficial for anybody, consumers or suppliers. If I remember correctly, during the experiments, the tariff that was imposed only seemed to diminish profits for one party or the other.

10 comments:

Bryce Larkin said...

I don't understand, haven't any of the US furniture makers or the US Commerce Department taken an economics class? They would understand that tariffs hurt everyone. It is true some US furniture makers would lose jobs, but they will find new ones that they have a competitive advantage over.

Bryce Larkin said...

I do agree that many jobs will be lost in many industries because China is starting to industrialize. I think in the future we will see more companies complaining to the government about their jobs.

stevepadilla2 said...

I believe in true Capatilism. In that only productive and the most efficient should survive. In most cases I wouldn't care that China were exploiting their labor force by paying them dollar a day wages and then selling their products to the US at a discount. However, China is actively making every effort to depreciate their currency against the dollar so that Americans can more affordably purchase Chinese goods. For years world economists have been trying to get china to set their inflation to a better floating rate index then the dollar but it isn't happening. China has made it so that the world can purchase chinese goods more affordably but is screwing everyone else because china isn't buying expensive foreign goods. Keeping all the generated revenue inside China and causing a trading deficit for any nation trading with China. There needs to be better ways to incur both costs and benefits to global producers and consumers.

Maudi said...

It is important for our government to remember that they are only hurting the consumer. Tarriffs do not always help the struggling economy. Often times companies in America who push for tarriffs on chinese goods shouldn't be in business; because, of the law of compartive adavantage which says there is always a coutry that has the advantage when it comes to producing certain goods. It is obvious because of material and labor cost that China can do it much cheaper than America. Who really cares the consumer just wants to get the most bang for their buck. We need to stop fighting capitalism and start embracing it.

Dr. Tufte said...

-1 for spelling mistakes in StevePadilla2's and Maudi's comments.

Tariffs help domestic producers. They hurt domestic consumers. They tend to hurt foreign producers, but the effect can actually go the opposite way too.

So, let me translate: American furniture makers want to help themselves by hurting American consumers, without doing anything clear to the Chinese furniture makers. How does that make you feel? It makes me feel lousy.

Keep in mind that public choice theory indicates that this tradeoff will be politically possible in a democracy if the benefits are focused on a small group, and the costs are spread out over a large group.

wooden furniture said...

Hallo,
I'am Amirul Anas from jepara (INDONESIA).
in jepara there's so many a little company that make a wooden furniture, such as antique reproduction furniture,classic furniture, minimalistic furniture, Antique furniture and outdoor furniture.
i want to offering and looking for the importer for those product, but i dont know how?
even those product are cheap price and have a good quality.
if there is interesting with those products, it be able to cooperated with me. tks

chinaimport said...

There are too many Chinese products imported, cheap, due to cheap Labor in China, not to take measures. Protectionist measures, like tariffs.

chinamarketplace said...

If you ask me, high tariffs on China's imports aren't a solution. The competition should be free, as should be the trade action. After all, due to imports and exports, China's market place became so professional.

chinawholesaler said...

More and more countries started to feel threatened by the economic potential of China. It already is one of the biggest producers of wholesale goods, developed countries must do something to stop this process. Tariffs are one solution.

sourcingchina said...

These tariffs miss their point, I think. China is a preferred source of goods and services because of the relatively low cost of
manufacturing and raw materials available there, so both producers and consumers win from this situation.