President Obama deserves credit for making a tough call on trade. On September 11, he decided to impose tariffs on consumer tires from China for the next three years, resisting the pleas of most opinion elites across the nation and one of the principal financiers of our massive public debt: China's government.
Though many industries have been battered by imports from China, the safeguard mechanism permitted under rules China agreed to upon entering the World Trade Organization eight years ago has never been invoked before this month. While the merits of the trade case filed by the United Steelworkers (USW) union seeking relief from a massive surge of imported Chinese consumer tires were quite clear, an absurd mythology has encompassed it.
Even though the International Trade Commission (ITC) recommended tariffs after hearing copious evidence from importers and the Chinese tire industry as well as from the USW (which represent tire workers), opponents of the tariffs still insist that the decision will be counterproductive, raising prices while creating jobs in other importing nations. That is complete nonsense. No other exporter can replace the market share of consumer tires that China currently holds. Goodyear has indicated that it will invest $600 million in its American tire manufacturing facilities, making it highly likely that the tariffs will allow for some capital investments in the domestic tire industry and put tire workers back on the job. Prices for tires--if they rise at all--will increase by $3 per tire according to the ITC, while the economic benefits to the nation, in the form of jobs and wages saved, taxes paid, and corporate profits--will more than double that.
Some critics of the tariffs have pointed to potential retaliation by China against U.S.-produced chicken feet and auto parts. This is merely bluster by Beijing, which is not normally held to account on trade issues. For eight years, China has not faced serious sanctions for a beggar-thy-neighbor, mercantilist trade policy. But remember this: China depends on access to the U.S. market for its own employment and growth, and will not ultimately risk its livelihood to make a point.
Others believe that the outcome of this case will lead to the filing of even more import surge cases against China by industries such as textiles or steel. The sad fact is that scores of American industries have seen an import surge from China. While a few more cases may be in the offing, a far more likely outcome of the tire case is a serious bilateral negotiation between the U.S. and China to address a number of trade irritants, such as massive industrial subsidies, lack of market access, intellectual property theft, persistent dumping, and an exchange rate that most economists believe is dramatically undervalued and misaligned.
Does anyone still believe it is a good thing to outsource not only our manufacturing but also our debt financing to China? The tire decision alone will not change this equation, but it could chart a better course for America.
Revitalizing manufacturing, reducing our trade imbalances and bringing down our public debt are interconnected. The tire trade decision alone will not accomplish these goals, but it may lead lawmakers to embrace a new strategy to grow manufacturing in this nation. Trade enforcement as articulated by President Obama is an essential component of that strategy, but it is only part of the equation. We need a results-oriented trade policy, one that recognizes the importance of opening new markets as well as enforcing the rules. It is refreshing to see a pragmatic national leader on trade after so many years of benign neglect.
Follow Scott Paul on Twitter: www.twitter.com/ScottPaulAAM
However, the problem with this decision is that many companies have already begun moving their distribution OUT of China to other countries who are not faced with the same tariff (such as India). So although this tariff on Chinese tires imported to the US seems like a good thing right now, nothing much will really change except for the location the tires are made.
What Obama should have done (which would have been HUGELY unpopular and perceived as quite protectionist outside of the US) was enact a tariff on every single product imported into the United States regardless of what it was and where it was made. Free trade does not work when everything moves one way. It's time to institute FAIR trade.
US made tires will be the same price they always were pre china tire dumping
its about time we start leveraging this
china needs our market for their cheepo goods more than we need those cheepo goods
20% tarriffs on all cars and auto parts.
Hopefully you are right when you say we might get ", a new strategy to grow manufacturing in this nation".
There are those who still want to call this protectionism, when in fact it was merely levelism.
Levelism does not protect industries, it merely removes unfair advantages gained through low wages, low environmental controls and manipulated exchange rates.
http://corporate-statesmen.org/images/LEVELISM.pdf
This is the handle that is needed to stop the race to the bottom ...
This is kind of nit-picking, but it is interesting to notice how much executive power has grown. Originally Congress was charged with the responsibility to set tariffs and regulate trade.
Article1, Section 8 of the US Constitution is pretty specific about this.
http://en.wikipedia.org/wiki/Article_One_of_the_United_States_Constitution#Enumerated_powers
So I guess Congress can delegate its powers to other branches, the executive branch in this case?
mostly to international organizations like WTO, but alos to the exectutive branch as well
I suppose the executive branch is the lesser of evils
the intent was that congress was closer to the people, and therefore would represent their interests
but of course such has not been the case with trade, and only global corporatists have been represented, whil whole industries, jobs an communities in the midewest suffer