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Wednesday, May 25, 2011

"Antidumping in Action"

When it becomes more expensive for producers in China to sell their goods in the US due to tariffs, bi-lateral exchange rate changes, increasing wage costs in China, etc., production does not necessarily move to the US:

Antidumping in Action, by Bill C: Today's Washington Post provides another example of our dysfunctional "Antidumping" rules in action. This case is about antidumping tariffs imposed on furniture imports from China:

But do tariffs work? In the case of bedroom furniture, they’ve clearly helped slow China’s export machine. In 2004, before tariffs went into force, China exported $1.2 billion worth of beds and such to the United States. The figure last year was just $691 million.
Over the same period, however, imports of the same goods from Vietnam — where wages and other costs are even lower than in China — have surged, rising from $151 million to $931 million. The loss of jobs in America, meanwhile, only accelerated.

This may be a case where the differential tariff treatment between Chinese and Vietnamese furniture which resulted from the antidumping case induced "trade diversion" - i.e., an efficiency loss because the trade preferences result in imports coming from someplace other than the low cost producer. However, in this example, it could also be the case that comparative advantage shifted to Vietnam as China's labor costs have risen.

Furthermore:

The only Americans getting more work as a result of the tariffs are Washington lawyers, who have been hired by both U.S. and Chinese companies. ...

    Posted by on Wednesday, May 25, 2011 at 12:24 AM in China, Economics, International Finance, International Trade | Permalink  Comments (7)


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