Tariff on Tires from China Ill Advised

It must be something in the Potomac water. Every U.S. president since Carter seems to be impelled to impose an ill-advised tariff that harms American consumers. President Obama's turn at the bat may turn out to be more ominous both because of the timing and because of what it seems to say about his attitudes and ability to stand up to special interests.

Late on Friday the 11th — the traditional times for decisions administrations don't want to see scrutinized too closely — President Obama announced a decision to impose a tariff of 35 percent on inexpensive Chinese tires. The decision was bad economic, bad diplomacy, bad politics and harmful to U.S. consumers.

The decision came in the wake of a ruling by the International Trade Commission that increased imports of Chinese tires had disrupted the domestic tire manufacturing market. But a president has complete discretion as to whether to implement ITC recommendations. The only party pushing him in this case was the United Steelworkers union. Even domestic tire companies were lukewarm at best.

It's difficult to imagine that this decision will save any U.S.

jobs. Importers will simply substitute inexpensive tires from Mexico, Brazil, Indonesia or India.

Diplomatically, however, the decision will do immense harm. Leaders of the G-20 nations, understanding the temptation to go protectionist during recessions but understanding that protectionism deepens rather than alleviates recessions, vowed publicly to avoid protectionist measures last November and again in April. Few nations have held to that pledge. With the U.S. backsliding — and with the next G-20 meeting scheduled for September 24-25 in Pittsburgh — the protectionist floodgates could open, causing immense economic harm worldwide.

China has begun the process that could lead to retaliatory tariffs on U.S. auto parts and chicken meat. More important, however, is the fact that China is the most significant buyer of U.S. government debt, and has already expressed concern about the future value of the dollar. If China stops buying U.S. T-bonds, there might not be an effective market for them.

If President Obama is willing to do something so harmful at so many levels simply to placate one union, what are the chances he will stand up to the wave of demands for similar short-sighted "protection" demands from other unions and industries?

REPRINTED FROM THE KINSTON FREE PRESS.

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