Thursday, March 3, 2011

US Tire Tariff

In 2009, the United States imposed an additional 35% tariff on imported Chinese tires (or tyres if you are British). [Here is the New York Times article as well]. As I show in Prin. of Microeconomics, tariffs are generally welfare reducing overall. While they do help domestic producers by partially sheltering them from world competition, and they do increase government revenues, they reduce consumers welfare (or economic well-being) by a greater amount than the gains in domestic producers and government tax revenues.

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