The price effect of China tire safeguard

This paper evaluates the impact on the tire price of China Tire Safeguard implemented by the US government for three years from 2009 to 2012. We find that the safeguard tariffs have been fully reflected onto the unit value of imported tires from China, which implies that tire exporters from China have not absorbed the tariff in their original export price. Interestingly, we also find that the unit value of imported tires from the Rest of the World rose during the safeguard period even though their products were not subject to tariffs. At the same time, domestic US tire producers increased the price significantly. However, such price increases were temporary: both unit values (from China and the Rest of the World) and US producers’ price gradually declined when the safeguard tariff expired.