Don’t Tread on Me

The United States International Trade Commission has recommended that President Barack Obama impose a 55% tariff on car tires imported from China. Obama must make a decision by September 17, and this issue might show the direction in which his administration will be heading regarding international trade.  Consequently, this is an issue that is important not just to the U.S. and China, but to Canada and the rest of the world.

As a senator and as president, Mr. Obama’s stance on trade has been erratic, at best.  Further, as his meddling in the U.S. auto industry shows, he has a propensity to put politics ahead of sound economic principles.  If Mr. Obama decides to side again with unions, all other trading partners will have been put on notice.  This administration sees free trade (and its associated wealth creation) as a secondary concern.  And you know, there’s nothing better than protectionism to lift you out of a recession.

Putting aside how worrying this should be for the rest of the world, this should be worrying for Americans, as well.  As The Wall Street Journal notes:

Rutgers University economist Thomas J. Prusa, who testified before the ITC on behalf of importers, said it is unrealistic to think tariffs lasting three years would spur domestic investment in tire manufacturing. More likely, more tires would be imported from other low-cost producers, he said.

Mr. Prusa said tariffs could cost 25,000 U.S. jobs and force consumers to spend $600 million to $700 million more a year on tires. The ITC doesn’t calculate tariffs’ economic impact when studying complaints — something the administration is sure to do.

Forcing Americans to pay more for tires will do nothing to alleviate suffering.  In fact, it will have a net negative effect on the prosperity of the U.S. populace.  Mr. Obama should know this.  I guess we’ll see if he does (or if he cares) in a few weeks.