Obama caves to big labor

This didn’t take long. Late Friday President Obama imposed punitive tariffs on Chinese-made lower price tires and by Sunday China had announced it was considering tit-for-tat tariffs on imports of U.S. chicken and auto products.

It’s hard to see this as anything other than Obama currying favor with organized labor and Rust Belt Democrats at a critical point in his drive for health-care reform. The United Steel Workers had sought the tariff, saying 5,000 jobs had been lost in the industry since 2005. But U.S. tire makers had opposed it. They had largely gotten out of the low-end market and both Goodyear and Cooper make tires in China for sale in the United States.

The White House, for its part, insists that it is only enforcing trade laws already on the book. The particular part of the trade law, unused until now, was enacted as part of China’s entry into the World Trade Organization and is intended to protect U.S. industries from a sudden surge of Chinese imports, giving them time to regroup and compete.

The Obama ruling calls for three years of tariffs — a 35-percent tariff in the first year, 30-percent in the second and 25-percent in the third. The union and its allies had asked for tariffs beginning at 55 percent.

The cost of the tariffs will be born by U.S. shoppers looking for bargain-priced tires and, potentially, by U.S. producers of poultry and auto parts. The Chinese claim, rather sweepingly, that they too will be hurt by the tariffs, losing 100,000 jobs and $1 billion in exports.

Trade issues — here and in China — are hardly immune to domestic political considerations and are subject to considerable poker playing by trade negotiators. The tire tariffs will surely come up at the G-20 meeting in Pittsburgh later this month when Obama meets with Chinese President Hu Jintao. Commercial relations between the United States and China are too important to allow a trade dispute to escalate into a trade war.

One Response to "Obama caves to big labor"

  1. MightyMo  September 15, 2009 at 12:32 pm

    He better think a little harder next time about which battles he wants to wage. Of all the American industries to take a supporting stance for, I don’t think the American tire industry is one that rises to the top of the list.
    Heck, I would never reccomend an overpriced and underperforming American tire over an import. Maybe if they started to produce better tires they might have a good fight to wage.
    Point is that tarrif’s never work unless you’re waging a tarrif war against a weaker trader in support of a worthy product. Thanks to our own desire for cheap goods, we’ve built China into far too strong a nation to wage tarrif wars with.
    Now if our goal is to think of ways to stop Chinese imports all together and buy American again…..

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