Research And Describe The Chinese Tire Industry Exports To The U.S.
First, read the following case:
U.S. Tariffs on Tire Imports from China
Then using some of the resources provided in this section you are asked to think as global managers in the same industry and review the questions at the end of the case. Prepare a paper as an internal memorandum to the CEO which overviews the issue and explains the talking points raised from the questions.
Please note your reply must be comprehensive. This denotes that all work must include proper title page and bibliography. Your work minimally should be four to five double spaced pages and follow the proper rules for APA guidelines including but not limited to spelling and grammar. Please note that the use of “wiki's”, are unacceptable in academic work as are blogs and unauthorized websites. Included in this are the use of sites such as dictionary.com. All reference works must be scholarly, therefore, it is suggested to use the available links in the electronic library to aid your efforts.
Remember to use the assessment sheet to ensure your paper adheres to all grading and APA guidelines.
Suggested Resources
Tarun Khanna and Krishna G. Palepu, "Emerging Giants: Building World-Class Competitors in Developing Countries," Harvard Business Review, October 2006.
Antonie van Agtmael, "The Emerging Market Century: How a New Breed of World-Class Companies Is Overtaking the World," Free Press, 2007. Boston Consulting Group, "The 2008 BCG 100 New Global Challengers: How Top Companies From Rapidly Developing Economies Are Changing The World," January 2008.
Nirmalya Kumar, "Strategies To Fight Low Cost Rivals," Harvard Business Review, December 2006.
Rosabeth Moss Kanter, "Transforming Giants," Harvard Business Review, January 2008. A classic restatement of the factors that enable multinationals to stay agile.
Susan Berger, "How We Compete: What Companies Around The World Are Doing To Make It In Today's Global Economy," Doubleday, 2005.
Michael Porter, “How competitive forces shape strategy,” Harvard Business Review, 1979, Volume 57, number 2, pages 137-145. The classic statement of the Five Forces framework. Still worth a read (and re-read).
Michael Porter, “What is strategy?” Harvard Business Review, November-December 1996, pages 61-78. A defense of the Five Forces framework at a time when the "benchmarking" and "core competences" were all the rage.
Michael Porter, "The Five Competitive Forces That Shape Strategy," Harvard Business Review, January 2008.
Rubric
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Paper
Question One
Imposing tariffs on Chinese tire imports was meant to protect the U.S domestic tire industry. It was argued that the cheap imports did limit the ability of the industry to be stable and created employment (Hufbauer & Lowry, 2012). However, this was never the case. The U.S tire industry never really created employment as was expected. In fact, it suffered neither losses nor gains. Imposing tariffs on Chinese tire imports never really led to the local tire industry increasing sales. On the other hand, U.S tire imports deviated from China to countries like South Korea, Thailand, Indonesia, Canada, and Mexico (Hufbauer & Lowry, 2012). These countries claimed massive exports of tires to the U.S as a result of the tariffs.
The Chinese tire industry suffered a major hit. Their share of tire exports to the U.S reduced significantly as U.S importers opted for importation from countries like South Korea and Thailand. The U.S. importers from China also suffered because they had to look for alternative markets of supply; having to leave their trusted supply chains.
Tariffs are political and are often used by countries to control imports from some nations while giving others favorable conditions. Tariffs are meant to protect the products of a domestic country from foreign competition by reducing the imports that hinder the ability of the local domestic market from realizing maximum gains (Rarick, 2016). The political nature of tariffs in this case was when the U.S decided to impose tariffs only on imports from China and not all tire imports. In the end, the act only limited imports from China and improved those from other countries. If the primary goal was to protect the U.S domestic tire industry, then tariffs could have been imposed on all tire imports into the U.S. In the end, the tariffs never really protected the industry; they only hurt imports from China.
Question Two
Theoretically, no country benefits from imposition of tariffs. Tariffs hurt the economy of the country on which it is imposed and the country imposing the tariff (Khanna & Palepu, 2006). I would never really expect the use to retaliate by imposing tariffs on Chinese goods. There will be no economic benefit from retaliating, doing so would just hurt the local consumers more and compound the problem (Felbermayr, Jung & Larch, 2013). The fact that China imposes tariffs on U.S imports already hurts Chinese consumers and U.S exporters to China. On an economic scale, I would never expect the U.S to react by in turn imposing tariffs on Chinese goods. Instead of retaliating, the U.S would have to lower their exports to China and seek to maximize exports to other countries that are friendly to them. Besides, retaliation would only lead to political pressure between the two countries.
The U.S might have to file a petition with the international trade organization rather than retaliation. The organization would have to determine if U.S imports were causing market disruption in China. In that case, China would be within their rights to raise tariffs on U.S. imports. Imposing tariffs is not something done anyhow and they must never violate WTO rules. Both the U.S and China would have to argue their cases and it is upon the commission to determine whether imposing tariffs is wrong or out of bounds.
Question Three
The fact that tire imports from Thailand, Indonesia, and Mexico rose could imply ...