Chinese tires + U.S. chicken feet = trade war.

How is this? There seems to be no link between these 2 products. Well, think again and read on.

In September of 2009, the United Steelworkers and International Trade Commission encouraged President Obama to impose a tariff on automobile and light-truck tires imported from China. American imports of Chinese tires tripled between 2004 and 2008. With four American tire factories closing in 2006 and 2007, and more expected to close in the future, the Union’s request was an effort to control competition and alleviate the disruption of the $1.7 billion market, helping to protect the jobs of American tire workers. Obama conformed and inflicted a three year tariff on Chinese tires for 35 percent the first year, 30 percent the second and 25 percent the third. This is the first time that the United States has invoked a special safeguard provision, as allowed by the WTO.

Needless to say the Chinese were not happy with this corollary and retaliated. How did they retaliate… through chicken feet. That’s right, chicken feet!

One country’s trash is another country’s treasure. 

Although chicken feet, or “phoenix talons” as the Chinese call them, would usually end up being ground into parts for feed in the United States, they are a delicacy in China. China’s production of chicken feet isn’t enough to satisfy its domestic demand, resulting in the need to import from the States. American producers benefit from the ability to sell feet to China for 20 to 30 times more than they could in the States and the Chinese benefit by having more supply to help meet their demand. More than half of China’s imports of chicken feet come from the U.S. 

As a reprisal to the tariff on Chinese tires, China’s Ministry of Commerce announced it would begin imposing antidumping tariffs ranging from 43.1% to 105.4% on imports of chicken parts from the U.S. China’s argument was that domestic producers could not sell their products and were losing money to imported chicken parts from American producers. In 2008, the U.S. exported $677 million worth of chicken to China, half of which was chicken feet that sold for $0.60 to $.80 per pound in the Chinese market, much more than they could sell for in the U.S. The fact that chicken feet sell for much higher prices on the Chinese market than they would in the U.S. proves they are not being dumped or sold below costs. The new tariffs would price American chicken feet out of the Chinese market.

So who is affected by this war? 

The consumer! That’s right; ultimately the consumer seems to always pay the price. The Chinese consumer will pay higher prices for their “phoenix talons”, as the supply decreases and the price rises and the America consumer will pay higher prices for tires due to the higher cost of domestically made tires and the tariffs that will be imposed on cheaper Chinese imported tires. 

Chinese producers have the Ministry of Commerce looking for them and the American producers have the International Trade Commission looking out for them, but as usual, no one seems to be looking out for the consumer.