One of the major issues in the economic world right now is the trade war between the United States and China. China is closer to a trade war with the U.S. than any time in the last five years as the two countries argue over the proper value of the Chinese currency. To sum up two major issues between the two nations in one sentence: China and the U.S. are bickering over tariffs on tires and exports of chicken.
The controversy started when President Barack Obama approved raising the on all car and light truck tires from China in an effort to slow the growth of U.S. imports of Chinese-made tires. Unions blame the growth of these imports for the loss of thousands of American jobs. China accused the U.S. of protectionism and said the move violates World Trade Organization rules. Then China announced it would investigate complaints that American exports of auto and chicken products benefit from government subsidies or are being dumped, or sold below market price, in China. So Beijing filed a World Trade Organization complaint over the tire tariffs, a move that sets off a 60-day WTO process where the two sides try to resolve the dispute through negotiations. If that fails, China can request a WTO panel to investigate and rule on the case.
Before the newly established tariff, the tariff was at a lowly 4%, but Obama’s decision imposed an additional tariff of 35% in the first year, 30% in the second year, and 25% in the third year. Obama decided to impose trade penalties on Chinese tires after the U.S. International Trade Commission, an independent federal agency that provides trade policy advice to the government, ruled that an influx of the tires into the U.S. was hurting American producers. The raised tariffs are meant to save American jobs, though it's unclear if the higher tariff will do that. The United Steelworkers union says more than 5,000 tire workers have lost jobs since 2004, as cheaper Chinese tires overwhelmed the U.S. market and hurt profits for...