U.S. Begins to Limit Import Surge from China

According to an article in the New York Times, the Bush administration, reacting to a flood of Chinese clothing imports since January, began a process to impose import quotas on shirts, trousers, and underwear. The administration said it would investigate the need to improve new quotas to prevent a “market disruption.” The announcement came just three days after the Commerce Department published data showing that imports of cotton knit shirts increased 1,257 percent in the first three months of 2005 compared with the first quarter of 2004. Imports of Chinese cotton trousers jumped 1,500 percent, while imports of underwear tripled. Textile executives were jubilant and very pleased when they heard that the government was going to take action. According to Lloyd Wood, spokesman for the American Manufacturing Trade Coalition, “It sends a strong message to China that predatory trade practices will be investigated.” However, Eric Autor, vice president for international trade at the National Federation of Retailers said that “Imposing new quotas is just going to impose a hidden tax on consumers.”

American Textile executives say the latest surge of Chinese imports has hit them directly. The National Council of Textile Organizations says at least 17 textile mills have closed and 17,000 industry jobs have vanished since Jan. 1. Some analysts have predicted that China will capture as much as 70 percent of the United States market if nothing is done. Do you agree that the administration should re-impose quotas on textiles imported from China to protect US manufacturers? Or do you agree with Eric Autor, that as a consumer you don’t want to pay any extra taxes on these items?


Anonymous said...

Of course there will be a surge in imports from china, as well as other countries.. being that the tariff for textiles expired on Jan. 01. 2005.
Competing in a quota-free environment represents the greatest challenge ever faced by United States textile manufacturers, because if left unchecked, China’s heavily subsidized textile and apparel industry will monopolize the U.S. market. When importers and retailers were polled at the Cotton Sourcing Summit in Miami in February 2004 as to what percentage of the U.S. market China would capture in a quota-free environment, 43 percent said China would seize 50 to 75 percent, while 44 percent responded with 75 to 90 percent.

While we continue to support china and other countries, because of the low wage. we are suffering here in the US, with jobs lost and as well as a bad economy. While business will strive in making a profit, we will continue to boost the chinese economy, who in return is working with russia on military advancements.. wow!

Dr. Tufte said...

The rational thing to do in this situation is to buy Chinese textiles.

American textile manufacturers just want your money. Who doesn't? They want to get your money by offering you less consumer surplus. The Chinese want to get your money by offering you more consumer surplus. Which one is on your side?

The issue of subsidization is a diversion. If the Chinese choose to do this, they can do it in 2 ways: 1) subsidize their firms to sell to you at lower price, or 2) send you a rebate check. Either one gets them more sales, and you more stuff. I recommend feeling good that the Chinese government is giving you stuff that they are not giving their own people.

Anonymous' comment about military issues is also a lark. The Chinese are making something physical and non-liquid and converting it into a more liquid form when you buy it. The big change is not the creation of profit it is the transformation in liquidity. Liquidity can help them buy what they need easily; yet Anonymous' implies that the are building rather than buying military hardware. There's a big disconnect there...