About Me

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I am a young MBA student at Johnson & Wales University in Providence Rhode Island in the United States. I am from Mali in West Africa and have lived in over 6 different countries in 3 different continents. I like to think of myself as worldly and others will describe me as a Third Culture Individual (one that grew up in cultures that are not their own)

Wednesday, June 30, 2010

Chinese Chicken Feet and Tires!?

This week in my MBA Global Trade & Finance class we discussed this new trend on Chinese chicken feet and tires. You don't even have to say it, because seriously chicken feet?? What could possibly be that interesting about chicken feet and tires? well if you know International Trade then you will know about the trade war (YES its a trade war!) currently going on between the USA and China.

So this is the gist: China can create tires at a much lower cost than the USA, but because the Chinese tire imports has been found to be disrupting the $1.7 billion US market the International Trade Commission (ITC) took it upon themselves to recommend that the president impose new tariffs on these imports from China. Funny enough the ITC had the same recommendations for President George W. Bush- being a republican he obviously declined the commission's recommendations. Obama on the other hand accepted the recommendations and went ahead and imposed an additional 35% tariff on top of the already imposed 4% tariff on Sept. 26. This tariff has obviously made chinese tires more expensive to US customers and therefore slowly but surely pushing the chinese out of the US tire market.
The chinese LOVE their chicken feet, the population would practically do anything to get their little hands on those (tasty) chicken feet; unfortunately chickens after all only have 2 feet therefore making them very scarce in the Chinese market. the USA on the other hand don't put as much prestige on these chicken feet as the Chinese do, actually they don't like them at all! Therefore it makes perfect sense when the US exports these feet to China, and on the other side of the world the Chinese should gladly welcome these delicacies at a much lower cost! However this is not the case at all! The Chinese government has imposed a 105.4% tariff on imports of chicken parts from the US. This may leave many of us bewildered, how could China that loves these chicken feet so much possibly impose a tariff that high on their imports!

It is only fair to say that this action from China was clearly that of a RETALIATION!! Well at least that's the first thing that comes to mind since they have yet to come with a concrete reason as to why they were imposing such an incredibly high tariff on chicken parts imported from the U.S. First they accused the U.S. of 'dumbing' their chicken parts in the Chinese market, but evidence proved the contrary. Jim Sumner, president of the USA Poultry and Egg Export Council could not have said it better when he said "unfortunately, U.S. poultry is a big target, and we have simply gotten caught in the cross fire." This is a new war, and I definitely cannot wait to see how it all plays out!

Stay Tuned...