2. YearU.S. Tire Plants 2006-20074 plants closed 20083 plants closed 2006-20081 plant opened The U.S. imports of Chinese tires more than tripled from 2004 to 2008.

3. The USITC Imported Product determinesIncrease in Quantities Injury or Threat to a Domestic industry recommends The President Imposes Tariff as a Relief

4. THE USITC  1 st year: 55%  2 nd year: 45%  3 rd year: 35% THE U.S. PRESIDENT  1 st year: 35%  2 nd year: 30%  3 rd year: 25% Adjustment

6. PROS  To increase the U.S. domestic tire industry competition  To increase a domestic employment  To have a tax revenue that can be used for other purposes CONS  The U.S. tire consumers have to pay a higher price  The duties would be an act of protectionism and a violation of global free-trade principles  There is a high probability that China will retaliate on import of chicken from the U.S. and could sell some of its extensive holding of U.S. Treasury debt.

7. ABCD EFGH abcd efgh p im p ft p ex p im p ft p ex Q Q

8. Welfare Effects on an Import Tariff Consumer Surplus- ( A+B+C+D) Producer SurplusA Government RevenueC+G National WelfareG – (B+D) ABCD EFGH p im p ft p ex Q

9. Welfare Effects on an Import Tariff Consumer Surpluse Producer Surplus- (e + f + g + h) Government Revenue0 National Welfare- (f + g + h) abcd efgh p im p ft p ex Q

10. Exporting Country Consumers+ Producers- GovernmentNo Effect Country- Importing Country Consumers- Producers+ Government+ Country+/-